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RE: [newtech-1] LLC + 501c3 question

From: Ryan F.
Sent on: Tuesday, March 19, 2013 10:25 PM

Hi Anthony

 

You may find it helpful to review the 1023 application of the Wordpress Foundation.  I am in the process of setting up a hybrid structure (both nonprofit and for profit) it takes a bit of time/money and once it is setup there is a lot of corporate governance.

 

Remember that a B Corp is just a certification and has no tax benefits

 

Cheers

Ryan

 

 

From: [address removed] [mailto:[address removed]] On Behalf Of Anthony Zeoli
Sent: Saturday, March 16,[masked]:01 PM
To: [address removed]
Subject: Re: [newtech-1] LLC + 501c3 question

 

Alyssa,

 

I am working on Netmix.org, which will be a non-profit developing a free, open source theme framework for artist/dj/band/label websites.

 

My goal is to set up a structure like Wordpress or Drupal. The Wordpress foundation operates Wordpress.org, which is the open source project. Automattic operates the professional services division, which supports companies that want to use Wordpress, but need guidance/support. There is Acquia for Drupal and Red Hat for Linux.

 

I know you may not have deep insight into this setup, but if you have some knowledge, I'd like to know more. Thanks.

 

After reading about 501(c)3 status, I'm wondering if I'm better served by B Corp of L3C.

 

Digital Strategy Works
WordPress | Digital Strategy | IA & UxD
 [address removed] | Visit Our Site
[masked]
Twitter: @dswks | Facebook: digitalstrategyworks 

 

On Fri, Mar 15, 2013 at 8:59 PM, Alyssa Martina <[address removed]> wrote:

John's response is on point. And, the government will scrutinize your 501c(3) if you also have a related for-profit company to make sure that it isn't being set up as a pass-through. You need to keep the two organizations separate from one another in many respects.

 

On Fri, Mar 15, 2013 at 10:28 AM, Stuart Dambrot <[address removed]> wrote:

This is a long overdue apology – I intended to write “Thank you, John” – but on reviewing messages on this topic just now, I saw the typo for the first time.

 

From: [address removed] [mailto:[address removed]] On Behalf Of Stuart Dambrot
Sent: Wednesday, January 23,[masked]:09 AM
To: [address removed]
Subject: RE: [newtech-1] LLC + 501c3 question

 

K you, John. I’ve considered an L3V, but I understand it requires grants to be made as a comparatively underused form of investment. Anyway, L3Cs are not yet available in NY.

 

I’ll look into a B corp.

 

From: [address removed] [mailto:[address removed]] On Behalf Of John Gordon
Sent: Tuesday, January 22,[masked]:25 PM
To: [address removed]
Subject: Re: [newtech-1] LLC + 501c3 question

 

Keep in mind that you cannot "own" a 501c3 organization. You can organize it, contribute to it and lead it, but whatever assets you contribute to it, and any growth in value that derives from it, is no longer yours. If the 501c3 is closed for any reason, its remaining assets have to be distributed to other charities - you can't sell it off, much less for a profit. You can be paid by the 501c3 for services rendered, but not "excessively," and your annual return is a public document. If your 2 organizations deal with each other intimately, you need to be able to document how you arrived at preventing conflicts of interest.

 

Just getting 501c3 status itself is a colossal pain; the process in long, arduous and not guaranteed of success. Setting up a B corp or an L3C might be a better route if you can do it.

 

Did I mention that the cost of accounting for a nonprofit is multiples of that of a business organization? Assuming that you can find a competent accountant that will deal with a 501c3, I know from being on a nonprofit board that the cost having the annual Form 990 is very high. If the rate is cheap, then there is probably a reason and this reason will haunt you later.

 

Just some thoughts based on experience in the field.

 

John Gordon

 

On Tue, Jan 22, 2013 at 9:49 PM, Anthony Zeoli <[address removed]> wrote:

Actually, I need to do the same thing with my .com under the LLC and my .org under the 501(c)3. I will read this myself. Thanks.

Tony Zeoli, Founder
Error! Filename not specified. 
WordPress | Digital Strategy | IA & UxD
310 W. 4th St, Winston-Salem NC 27101
[address removed] | Visit Our Site
[masked] 

My profiles: Error! Filename not specified.Error! Filename not specified.Error! Filename not specified.
Contact me: Error! Filename not specified.djtonyz Error! Filename not specified.tonyzeoli

 

On Tue, Jan 22, 2013 at 7:24 PM, Stuart Dambrot <[address removed]> wrote:

If a sole proprietor wants to form a two-component business structure (an LLC and a 501c3), what are the legal pitfalls? For example, I imagine that key issues would be resource sharing (one human resource, one computer, one office, etc.), expense allocation, taxes, funding the 501c3 in part through donations from the LLC and/or the sole proprietor, and intellectual property. Note that the names would be structured as Name (LLC) and Name Subname (501c3).

 

Sorry to be vague, but it’s an exploratory question that I’m asking for the first time, and after doing research as well.

 

Relatedly, the LLC web presence would be a WordPress site, and the 501c3 a YouTube or Vimeo channel. I’d like the 501c3 site to present as a page on the LLC site. Any thoughts on how that could be done would be greatly appreciated.

 

Thanks in advance for any and all advice and recommendations.

 

SM Dambrot





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