Legal Workshop on Hybrid Structures
The law firms of Morrison & Foerster, Jones Day, and Adler & Colvin presented a workshop today entitled “Hybrid Structures: Nonprofits, For-Profits, and New Corporate Forms.” The presenters included Susan Mac Cormac of Morrison & Foerster, R. Todd Johnson of Jones Day, and David Levitt of Adler & Colvin.
The audience consisted primarily of entrepreneurs at nonprofit organizations, including a significant number of Ashoka Fellows, staff, and partners.
The presentation began with an introduction to social enterprise – what do we mean by this term? What are some definitions and examples?
The presenters then discussed the menu of available legal forms, focusing on “hybrid” structures, where social, environmental, and economic missions are embedded in one or more legal forms. They discussed how the various models may or may not be effective in maximizing social and environmental goals through company operations.
Keeping his nonprofit audience in mind, David Levitt explained what an existing nonprofit with varied streams of revenue should consider if or when it decides to form a for-profit subsidiary or affiliate. Why might a public charity establish a subsidiary? Some reasons include expanding revenue-generating activities, limiting liability, protecting tax-exempt status, providing investment opportunities, and offering equity compensation to attract employees. David also discussed the following types of tandem structures: for-profit subsidiary of a nonprofit; nonprofit under control of for-profit; brother-sister relationship; independent but aligned (overlap in board members, contractual relationships).
The presentation was recorded and the webinar will be available online for free. Visit the Morrison & Foerster website for more information.