Q: My work is at a pivotal point and I do not know which direction to follow.  Please, is anyone of the Social Edge team willing to put in a pro-bono hour or two with me to determine my best laid course?  In a nutshell, I have developed several grassroots Montessori-based teacher training modules and courses that will contribute greatly to significantly increasing quality teachers and am stuck in the funding and marketing aspects.

Patrick O'Heffernan responds:

Social Edge cannot offer pro bono consulting --we have very limited resources.  I would direct you to the Foundation Center in San Francisco, which offers many free seminars and very inexpensive courses in just the topics you are looking for.  Also, you can use their Foundation Directory online for free there, where you can do sophisticated searches for funders, often with advice from the staff.  Finally, I would  take a look at elearning and at the Media Education Foundation for good ideas.

Q: If a start up organization wants to have a hybrid structure, at what point and what tools are needed to develop a hybrid from the start-up phase? Do you make one business plan outlining the structure/models and smaller business plans for each entity/venture?

See all Hybrid Model discussions and advice on Social Edge HERE. (updated August 2008)

Patrick O'Heffernan responds:

Before writing business plans for either, make sure you have good legal and tax advice. Many of the advantages of having both a for-profit organization and a non-profit one derive from tax advantages of the NPO, but these vary with each country's tax laws and accounting codes. 

If you set up two completely separate organizations, this may not be an issue unless they deal with each other, have interlocking boards, share space or people --then your first tool is a tax lawyer with knowledge of NPO law in your country.

Since you don't indicate if the startup is being planned or is in existence, I will assume that it is being planned. I would consider using a hybrid
structure from the beginning if you have the opportunity. This will allow you to base your business plan on revenue streams from both NPO grants and for-profit operations. More important, it will allow you to see the synergies that you can take advantage of between the two.

But first, get legal and tax advice.

Q: In association with Development Gateway Foundation, Intellecap is starting an online portal to connect investors and investees with a multiple bottom line approach. It will play an active role in attracting capital from both donors and investors to innovative social businesses. For supporting business development, it will also create an on-line network of service providers like investment, legal advisory, marketing, etc.

1) What are some of the services that could be a value-add for either investors or social businesses?

2) What are the value-added services that can be provided for investors?

Patrick O'Heffernan responds:

This is an excellent idea --one that is needed and one that will be well used. Similar ventures exist in the political realm to connect donors with non-profits or 527 organizations.

In the cases I am familiar with, the donors and investors remain unnamed to prevent the site from becoming a search engine for development officers looking for more leads and sending unsolicited proposals to investors who do not want them.

More importantly, keep in mind that it is very likely you will be visited by many more social entrepreneurs than investors or donors. If this occurs and is not anticipated, criticism and cynicism from the social entrepreneurs will begin to show up on the site and on other sites in discussion boards, undercutting what you are trying to do.  I would strongly suggest that:

- you consider lining up your investors first and be sure you have a strong critical mass of investors before launch

- you find a fair and equitable way to limit the number of entrepreneurs chasing your limited number of investors at any given time

- when investment is made, your site posts a case study or news note, not naming the investor, but naming the NPO or entrepreneur so other entrepreneurs can see that your site really does result in successes

I don't know if you were thinking of charging a fee to service providers for listing or advertising on the site, but if so, I discourage it. Some of them  might get business as a result of appearing on the site, but most entrepreneurs who visit the site will not have the need for or resources for accountants, lawyers, PR, etc - they are looking for cash. They also likely have some of those relationships in place.

Having said all of that, you might consider working with the donors/investors to offer entrepreneurs not only cash, but a package of services that the donor feels they need to succeed. 

Those could include:
- Legal and tax consulting
- Market research
- Banking and investment advice
- PR
- Accounting
- Management consulting
- IT consulting
- Human Resources/benefits
- Insurance
- Staff development/employment agency

If you have a pool of pre-qualified, highly competent, ethical and dedicated service providers, the donors can offer packages of cash and services, using this pool.

Good luck!

 Q: I am exploring ways of empowering women in developing countries through education and self awareness and nurturing their spirits, (I know there are numerous programs already in place, but more are needed). The aim is to have a ripple effect in positively influencing their children, husbands and families. I envision starting long distance training for corporate women to generate revenues which can be applied to help low/no income women. 

Is there someone who will help fine tune this idea and work with me to make it practically possible?


Patrick O'Heffernan responds:

There are four organizations that I work with that seek to do this, the Global Fund for Women and the International Museum for Women (IMOW), both in San Francisco.  The GFW understands fully Kofi Annan's words that nations which marginalize the female half of their population will never succeed financially, politically or culturally.  The GFW provides grants to organizations that help women get an educational start businesses, escape from poverty and brutality and religious or sexual slavery.  They also build women leaders in developing countries.  I cannot praise them enough.

IMOW works to demarginalize women by bringing their works and successes out of the shadows and letting the world know that women have been responsible for at lest half of humanity's progress.  IMOW seeks to educate men while it gives women voice.  Their "Imagining Ourselves" online exhibition attracted over  1 million participants - many from developing countries - mostly women who told their stories and the stories of the heroines of their countries in art, song, dance, poetry, stories.  Going through the online exhibition is a breathtaking experience.  And it does not ignore men...they are represented, telling stories about the women that inspire them.

The Center for Partnership Studies in Carmel, founded by best-selling author of  The Chalice and the Blade, Riane Eisler, seeks to educate men and women about the inherent structure of many societies that puts men in a position of dominance over women - and over other men - by devaluing the work and role of women and of caring in society .

Regionally, NamesteDirect Foundation provides small grants and technical assistance to women in Guatemala, Ecuador and southern Mexico to help them become financially independent. There are many micro loan organizations like this, but I work with them and love to see the power they give women in male-dominated so-called "traditional" societies.

Q: Can a nonprofit still retain its tax exempt status if its primary source of revenue to cover administrative costs is advertising?

Patrick O'Heffernan responds:

We at Social Edge cannot give legal advice, so your best bet is to go to the IRS site for non-profits.  Click on the "Charitable Organizations" tab and explore the requirements.

The IRS does state that: "Even though an organization is recognized as tax exempt, it still may be liable for tax on its unrelated business income. Unrelated business income is income from a trade or business, regularly carried on, that is not substantially related to the charitable, educational, or other purpose that is the basis of the organization's exemption. An exempt organization that has $1,000 or more or gross income from an unrelated business must file Form 990-T."

See Unrelated Business Income Tax Returns and the Form 990-T instructions  for more information about return filing. The obligations to file Form 990-T is in addition to the obligation to file the annual information return, Form 990, 990-EZ or 990-PF.

I would either contact a tax attorney or your local IRS office with this question.