What are partnership options for SEs?

Here are the comments that arrived in response to a question about nonprofit partnership options for a company a subscriber was starting up to import organic and fair trade wine from Argentina.
 
I am an attorney with quite a bit of experience in this area, and this is a question I get all the time.  There are many ways to do what you describe. One way is to do a joint venture, but if you go that route, you will have to deal with a host of special IRS rules that dictate how such a venture must be structured and operated so as not to threaten the charity's tax exempt status. Another way is to enter into contractual relationships pursuant to which either the for-profit company or the nonprofit (or both) will be compensated for goods and services rendered to the other. For this purpose, you can use management agreements, consulting agreements, leases, license agreements, etc. The nonprofit can also invest in the for-profit (or lend it money) and take profits in the form of dividends or interest. And, as you said, you can also have the for-profit donate profits to the charity. I often use a combination of these to accomplish my clients' social and business objectives. The key thing to understand is that if the charity has any kind of active role in the running of the business, the income it receives may be subject to UBIT (corporate income tax), and in an extreme situation, it could lose its tax exempt status. Giving profits to the charity is much simpler and less risky, but there are limits on how much can be given tax-free. The correct approach depends on the details of your business plan, financing, the expectations of the "partners, how you want the money to flow, whether you are willing to pay taxes, etc. Do yourself a favor and get advice from an attorney who has experience with these kinds of ventures. A good accountant is also very important, as the transactions must be treated properly for tax purposes.  (From Allen Bromberger)
 
Check out Pura Vida's model - they combine a for-profit with a nonprofit and it sounds like the combination works for them.  (From Cynthia Gair)
 
As you need investors, set it up with the business giving some portion of profits to the nonprofit. You will need the investors to agree up front to the formula as to how much.  It is better if the business maintains the flexibility to select the nonprofit beneficiary each year. Works for Newman's Own Salad Dressing! Do not have the nonprofit own the business along with investors, as the laws and regs on joint ventures between businesses and nonprofits are extremely complicated. For one thing, the nonprofit has to control the venture, and your investors would never go along with that.  (From Robert Tolmach)
 
Evergreen lodge is one of many social enterprises that have solved the problem of making the mission is baked into the dna of the business yet found a way to allow a financial return to investors. http://www.evergreenlodge.com it can be a lot of ways; for profit subsidiaries with a controlling interest by the non profit, etc. parsing multiple kinds of value for multiple stakeholders and goals requires a bit of legal and financial engineering, more than a traditional incorporation, but there plenty of models to follow.  For me, more intriguing questions would be around whether your startup is truly investible, and the feasibility of the partnership, the nature of that relationship.   (From Kevin Jones)
 
There are many ways that a for-profit like yours can partner with a non-profit besides simply giving them funds: Hire the clients with whom they work (even though this is not an employment agency, they work with families who could use a livable wage job); Encourage your other employees to volunteer their time with the non-profit, and provide them paid leave to do so; Launch a shared media campaign to increase awareness of the non-profit's work as well as your partnership; Host a wine tasting event in several cities where MFH has a large base of support, and allow their staff to make a presentation; Include an ad for MFH in your company's printed newsletter or catalog, as well as on your Web site I think that there is some strong potential in this partnership: the idea of "emptying a bottle of wine to fill a bottle of medicine" could go pretty far, if done well.  On another note, here is an interesting opportunity to get support for promoting such a partnership: http://www.ItsHowWeLive.com/  (From Jeremy Gregg)