Hybrid companies

[Mo-ran1]

Hi, this may seem funny to some of you, but this is actually the first time i have ever "blogged." It's some pretty powerful stuff, but i'm not entirely sure if i'm all set up correctly.

However, there has been some excellent input on some of these forums and i have an interesting topic that some of you may have some experience or advice in. I have just finished reading a book titiled "The Power of Unreasonable People: How Social Entrepreneurs Create Markets that Change the World" which i highly recommend. They touched on the topic of establishing and creating "Hybrid companies" (Part for Profit - Part non-profit). Interesting approach and one i am highly interested in.

I would love to eventually incorportate this "hybrid" approach into my own company. I have a small sized Home building and development company and we are finally designing our first LEED Certified Home (Leadership in Energy and Environmental Design) It's Green! It's highly Efficient, resourceful, and puts a lot of emphasis on the builder to build it correctly To get to the point; If the housing market ever turns, i would like to create a hybrid company where some of the profits are directed to the non-profit part of the company, where that money can be invested into renewable energy or a local / regional recycling program.

I was wondering if anyone has any knowledge or advice in regards to taking some steps into establishing a hybrid company. I appreciate your time and look forward to collaborating with you all on your own projects.

[bhnyc]

Congratulations on your LEED certification.

The topic of Hybrid entities is quite an interesting one. I know that the UK has actually formed a specific hybrid entity type – see the description from the regulator’s website (cicregulator.gov.uk):

“Community Interest Companies (CICS) are limited companies, with special additional features, created for the use of people who want to conduct a business or other activity for community benefit, and not purely for private advantage. This is achieved by a "community interest test" and "asset lock", which ensure that the CIC is established for community purposes and the assets and profits are dedicated to these purposes. Registration of a company as a CIC has to be approved by the Regulator who also has a continuing monitoring and enforcement role”

There is currently no similar type of entity in the US, although some people have achieved a similar result with two entities (could use LLC’s) – one for profit and another non-profit, ideally with a 501(c)3 exemption from the IRS. I have not looked into this for a while, but I recall there being some tax difficulties with this model – I think the nature of the relationship between the non-profit and the for profit and the transactions between the two are incredibly important.

I believe the difference between a hybrid and a pure non-profit is that the hybrid can engage in normal business transactions and do more than just take donations or engage in very limited commercial activities as is the case with a 501(c)3 non-profit.

Also take a look at this discussion thread in socialedge.org, it provides a great discussion on this topic.

socialedge.org/discussions/business-models/the-for-profit-non-profit-hybrid-model/

Good luck with your future ventures, and let me know how you progress.

[Jenie0109]

can you give some sample of hybrid companies?