I have a snack food business that fits a niche, high-end market. I am passionate about community education. My idea is to use the profits from the business to fund the microschool. This model would also employ the parents of the students, and the focus demographic are those which are typically considered to be financially underserved. The school itself would be modeled on the Sudbury Democratic Schools. How would I be able to create a hybrid situation for funding? As in, can I use the profits from the cafe to fund the school, and is it possible to also apply for grants, as we would be revitalizing underserved communities, providing employment as well as educational opportunities directly to families. One idea I had was to collaborate with social services to offer this opportunity. In theory, the microschool would start with 5 families. Once the model is successful, we open another one, and keep "planting seeds" with this model across the US.
Funding a business through another business has legal implications. You need to take care of few things here
1. Ensure the micro school is listed as a subsidiary
2. The funding business is the corporate parent and conglomerate which has rights to distribute funds between its subsidiaries. If not , then you need to create a parent structure first . Eg: Alphabet funding Google business.
3. There is disclosure about this funding and you allocate part of your funds so that school has continued funding
4. Make a resolution with your board of directors and make this part of your regulatory filing
5. If the school is not for profit , then you can consider doing this as a CSR activity . You need a board resolution passed even for this.
Please ensure proper corporate governance is maintained.
Hope this helps . Happy to get On a call if you need more info.
Answered 3 years ago
Hi
Firstly, it's great that you want to help people. It's also great that you have a business that is doing well from a financial point.
I am not a tax expert, but you would need to check the tax implications of funding one business from the profits of another. I do believe that this is possible, but a feasible tax structure would need to be setup. Regardless, I would NOT use profits from one business to fund the other, but rather think of a business model (+ grants, donations ect.) as a means of funding.
As for grants and social services:
Social services: from my knowledge, if you mean the official government social services, then they don't have much of a budget. As for grants: you most definitely can apply. Just take into account that it takes a lot of time, and they often require you to be a registered entity (non-profits of sorts).
I am a mentor on Startups.com, an international lecturer on entrepreneurship and negotiation, and a commercial startup lawyer. I've successfully helped over 400 entrepreneurs, startups and businesses and I would be happy to help you. When scheduling a call, please send me some background information and the 2 main questions you want answered so that I can prepare in advance (to give you maximum value for your money). My reviews: https://clarity.fm/assafben-david
Good luck
Answered 3 years ago
- Please consult with a CPA (Certified Public Accountant) and a lawyer.
- Also, you can (if you choose to) find a CPA who knows about the blockchain space. Particularly Decentralized autonomous organizations (DAOs). https://www.investopedia.com/tech/what-dao/#:~:text=The%20developers%20of%20the%20DAO,anywhere%20in%20the%20world%20anonymously.
The answer here itself should not be considered as financial or legal advise.
Answered 2 years ago
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