Tag Archive for: social entrepreneur

Structure Lab – the place to learn what structure to ask your legal advisor for. It can also be useful for foundations, investors, and others working with social benefit start-ups.

I feel wowed. I have been reading about structures for social benefit start-ups and considering my own for years now. I felt like I had a pretty good idea. Now I feel like I have a clear map. I even know what signs to look for.

photo credit: PharCyder

• No one owns a nonprofit. You can’t do investment vehicles with equity. And you can’t close them easily.
• Certain core factors drive decisions at different layers of your structure from the legal form to the governance structure. And governance structures can help manage mission/vision holding.
• Understanding what makes the IRS nervous helps uncover which structure will work for your organization.
• Foundations and investors avoid making their heads hurt. Your strategy for structure can help reduce their confusion and headaches.
• The last two are about understanding where those relationships fit on several values matrices. Knowing where you are in relationship to them, helps you communicate. Understand where you are on those matrices helps more smoothly facilitate many of your relationships.
• The difference between PRIs and MRIs.

  photo credit: seier+seier+seier

Key questions and explanations allow participants to create solutions that fit their situation.

• Some structures are easy to start or end, and others are hard (read, take time or capital). Consider where you will encounter resistance and what benefit that will bring you. Choose the resistance in a legal sense and resistance in the market that is right for you and your endeavor.
• It is hard enough to describe a new enterprise. Consider that when choosing a form – what structures do people understand.
• Clarity about the roles different relationships play and the degree of formality of your agreements support each.
• The management of your assets and your access to capital dance with the structure of your organization. There is a complex choice set that doesn’t neatly fit a decision tree.
• Consider the exit plan. It has implications in the structure. Do you plan to sell the org? What if you get hit by a bus?
• Don’t be seduced by scale nor lured in by the idea of wild profits. What is the right approach for the appropriate growth of your organization. Yes, it has implications for certain structures.
• Mediate the concerns of one level of structure (for example LLCs at the legal form level) with tools of another level (for example, governance and agreements).
• When creating hybrids, there are benefits and drawbacks to the 3 simple forms (and
  one complex form). The workshop explains what each one is useful for.

There is more, but this hopefully gives you a sense of the information provided. The approach of the workshop is playful, and the process allows for each person to understand their specific needs and values.

We also delved into L3Cs. They were legalized in January for Illinois. We discussed what makes them useful as well as what the alternatives are.

I wanted to come away with a clear decision on how to structure thrivable.org. I have that decision. I also know now how that can change over time, and what my plan can be for the organization(s) over time. Best of all, I feel equipped to manage the unexpected, in terms of structure. So I feel resilient and flexible structurally.

Way to go Criterion Ventures!