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  1. #1

    Question The Mechanics of a Non-Profit IPO

    I was just reading about how renowned investor Warren Buffett just bought the first share in Homeward Bound's Oma Village family housing project[1]. Can anyone describe the process for having an IPO for a 501c3 non-profit?

    [1]: http://www.youtube.com/watch?v=ofkKFSlnNi8

    I'm very intrigued by the idea, but confused with the implementation and execution; I would love to model our non-profit around the premise of the general public having a shareholder's stake in the company. How do you start the IPO? Would you need to file SEC reports? Would this company be listed in the stock market exchanges? So many questions...

    Thank you!!!

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    Another example would be that of the Green Bay Packers, which is a non-profit with public stock. For all intents and purposes this is what I want to establish. It looks like a lot of work, but in the end this is what is needed.

    http://www.packers.com/community/shareholders.html
    http://shareholder.broadridge.com/packers

  2. #2
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    Default Re: The Mechanics of a Non-Profit IPO

    If you plan on playing the big boys' game, I suggest you hire a lawyer and CPA to guide you through the process.

  3. #3
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    Default Re: The Mechanics of a Non-Profit IPO

    The Green Bay Packers are not 501(C)(3) corporation.

    You can't sell shares in a 501(C)(3) corporation.

    Also, the YouTube video you link refers to the housing project at issue as nonpofit, with no suggestion that it is tax-exempt, and twice states that what it describes is not actually an IPO (Initial Public Offering).
    Quote Quoting Homeward Bound's Nonprofit IPO
    Our nonprofit IPO is an “Immediate Public Opportunity ...to end homelessness” by purchasing fundraising shares and helping to create a model for affordable green housing for the future.

    Please note: All funds raised during this nonprofit IPO are tax-deductible and will be used to build Oma Village in Novato, California. Stockholders do not actually own stock or shares in the nonprofit public charity “Homeward Bound of Marin” or any of its assets. These fundraising shares simply offer shareholders an opportunity to “take stock in their community.”

  4. #4

    Default Re: The Mechanics of a Non-Profit IPO

    Quote Quoting adjusterjack
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    If you plan on playing the big boys' game, I suggest you hire a lawyer and CPA to guide you through the process.
    Know any that work probono? The corporation is being setup to facilitate funding, among other things. Yes we'll be playing in the major leagues, we've secured a patent on a novel employment law ADR system for resolving disputes between employers and employees. We used game theory to engineer a system of litigation that is cooperative, rather than adversarial, as well as engineered it to work within the construct of our adversarial civil law system. We think it will save for-profit corporations billions in settlement costs, while at the same time empowering the employee to believe that an equitable outcome can be reached without them escalating a dispute to the courts.

    As this new ADR process has the potential to benefit society, we want to make everything as transparent as possible, and feel that a non profit with public shares will facilitate this. I've incorporated my share of companies, but the devil is in the details on this one. The minute details of everything are admittedly beyond me, but so is putting the right people on the tasks. Ideal we would have a whole team working on the details of the best way to implement everything, but without initial capital it's a chicken and the egg problem. My personal goal in this venture is to get everything to a point that I can bring in paid executive staff and then let them take the reins.

    I'm thinking I should just setup a regular 501c3 and then let them reincorporate once all of the details have been worked out.

  5. #5
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    Default Re: The Mechanics of a Non-Profit IPO

    Quote Quoting MrMeow
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    Know any that work probono? The corporation is being setup to facilitate funding, among other things. Yes we'll be playing in the major leagues, we've secured a patent on a novel employment law ADR system for resolving disputes between employers and employees. We used game theory to engineer a system of litigation that is cooperative, rather than adversarial, as well as engineered it to work within the construct of our adversarial civil law system. We think it will save for-profit corporations billions in settlement costs, while at the same time empowering the employee to believe that an equitable outcome can be reached without them escalating a dispute to the courts.

    As this new ADR process has the potential to benefit society, we want to make everything as transparent as possible, and feel that a non profit with public shares will facilitate this. I've incorporated my share of companies, but the devil is in the details on this one. The minute details of everything are admittedly beyond me, but so is putting the right people on the tasks. Ideal we would have a whole team working on the details of the best way to implement everything, but without initial capital it's a chicken and the egg problem. My personal goal in this venture is to get everything to a point that I can bring in paid executive staff and then let them take the reins.

    I'm thinking I should just setup a regular 501c3 and then let them reincorporate once all of the details have been worked out.
    A non- profit cannot sell public shares. The reason any corporation would go public is to gain access to more funding however, those shareholders want something in return. This inandof itself violates the whole reason for a non-profit.

    So, your venture cannot move forward as a non-profit.

  6. #6
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    Default Re: The Mechanics of a Non-Profit IPO

    And when you set up a 501(C)(3), you don't own the assets of the corporation - you can't simply pluck the assets out and transfer them to a new corporation.

  7. #7

    Default Re: The Mechanics of a Non-Profit IPO

    Quote Quoting Antigone
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    A non- profit cannot sell public shares. The reason any corporation would go public is to gain access to more funding however, those shareholders want something in return. This inandof itself violates the whole reason for a non-profit.

    So, your venture cannot move forward as a non-profit.
    I'm sorry, I didn't mean to imply this was simply to generate revenue, the primary purpose of public stock would be for voting rights. A board has to be elected somehow, I think the public should be involved in this process. Having a offering would simply be a way to secure an endowment and allocate, a finite number, of voting rights.

    For example: http://usatoday30.usatoday.com/money...ale/51587896/1

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    Quote Quoting Mr. Knowitall
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    And when you set up a 501(C)(3), you don't own the assets of the corporation - you can't simply pluck the assets out and transfer them to a new corporation.
    You can dissolve a 501(C)(3) just like any other corporation, the catch is you have to donate any assets to another organization with 501(C)(3) status. I recall this dissolution asset transfer clause must be in the articles of incorporation for the IRS to even give you 501(C)(3) status. I've been known to be wrong and I'm no expert, but I think I'm right on this. I just remember when I incorporated another non-profit a few months back that I had to include this clause for the government to sign off on it.

  8. #8
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    Default Re: The Mechanics of a Non-Profit IPO

    Quote Quoting MrMeow
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    I'm sorry, I didn't mean to imply this was simply to generate revenue, the primary purpose of public stock would be for voting rights. A board has to be elected somehow, I think the public should be involved in this process. Having a offering would simply be a way to secure an endowment and allocate, a finite number, of voting rights.

    For example: http://usatoday30.usatoday.com/money...ale/51587896/1

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    You can dissolve a 501(C)(3) just like any other corporation, the catch is you have to donate any assets to another organization with 501(C)(3) status. I recall this dissolution asset transfer clause must be in the articles of incorporation for the IRS to even give you 501(C)(3) status. I've been known to be wrong and I'm no expert, but I think I'm right on this. I just remember when I incorporated another non-profit a few months back that I had to include this clause for the government to sign off on it.

    Since you are not looking to generate capital and since you probably don't have the several hundred thousand dollars, army of CPAs, investment bankers, analysts, a firm understanding of discounted cash flow evaluation and EVA, then I don't think going public is up your alley.

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