In this episode, we have the pleasure of speaking with past guest Omar Elhagmusa and bringing in new guest Paul Bryson. Omar was a past guest when I spoke with his non-profit lending company Illinois Facilities Fund (IFF). Paul is working for the Legal Aid Society (LAS) as a non-profit lawyer. We dive into the benefits of incorporating as a non-profit, and navigate a conversation of whether to start as an LLC or non-profit. Quite often we hear the benefits of starting an LLC, so these two guests together help fill out the story on the other side.
Omar explained his work with the largest Community Development Financial Institution (CDFI) in the Midwest. He gave more information on similar community finance institutions, such as micro lenders. Paul followed up with his perspective on the strong points and barriers of each side. Paul mainly expressed the initial goal is simply to determine capacity and what ways to move forward.
Our conversation evolved into something like a brief consultation. We discussed the impact of timely advice on the operation of initiatives, whether for-profit or non-profit. Business models play an incredible role in sustaining and developing community initiatives. Soon we discussed our takes on business model examples in the social good space, such as Foundry. Paul provides his expertise in carefully explaining L3C (low-profit limited liability company), which is the closest to a cross-over of for-profit and non-profit. He described the common approaches of what a social entrepreneur might experience; speaking from both a bank’s perspective and the community perspective.
“I think the final thing is sometimes people go ‘Well, if I’m a nonprofit, then I can’t earn money’. That’s a huge myth that I think we’re going to dispel as we go forward. ‘Nonprofit’ doesn’t mean you can’t earn money.”— – Paul Bryson
We dug a little further into nonprofit operations, such as relations with the IRS or choosing a board of directors. Omar suggested an untapped source for finding board members, and discussed the benefits of incorporating board culture into social enterprises. Keeping social good at the forefront becomes key.
“The temptation of doing the easy, fast thing at the beginning may not translate to helping you achieve your mission, which is why you start a social enterprise in the first place; because you believe in the mission and you’re trying to find a way to unlock capitalism in order to achieve that social good.”— Omar Elhagmusa
In a full circle moment, I asked for a verdict on switching from an LLC to a nonprofit. Suggestions on how you transition were given, but overall, switching is not to be done casually. During our conversation we also discussed topics like subsidies and common myths around non-profits, alongside examples to properly illustrate which social entrepreneur interactions to expect.
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