It's official. I'm putting together a non-profit fund that will fund student living expenses. Students will be expected to pay back into the fund when they're on their feet, and those funds will then be re-loaned to other students for 0 or very low interest. Details soon.
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If you are only giving out the loans to lambda school students I doubt the IRS will agree, it would need to be open to finding living expenses of qualifying students who choose other paths too, no? Otherwise just subsidy to complement of for profit. (Not an accountant)
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It won’t be used for student tuition, it’s just a low cost way to cover living expenses while in school. It won’t affect the revenue earned by us except that students won’t have to drop out due to homelessness
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I'm not questioning the motivation. I'm just pointing out the tax authority might have issues with it being tied to consumption of a specific for profit provider if you want the tax exempt status
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I understand what you’re saying but the tax code doesn’t make that case. It says it can’t benefit one “individual” but it doesn’t have any limitations I can think of that would stop, for example, a school for using it for the benefit of its students only
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Imagine if a specific brand of tenis racket maker stayed a non profit to give subsidized tennis balls to underprivileged buyers of its rackets...
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Or what if a for profit school started a nonprofit scholarship fund to help its students, like happens in nearly every school in the US? All 501c3
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Nearly every school in the US is for profit?
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No, nearly every for profit school has a 501c3 scholarship fund
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It'd be interesting if you could do a social enterprise hybrid consisting of a non- and for-profit. Investors other than students could invest in the for-profit side and see returns - plowing back Kiva-style. The non-profit could dole funds out based on need, and absorb losses.
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Almost would be fun as an individual to pick the students, "invest" in them, see it pay off, then reinvest.
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Ya, basically Kiva
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What you're contemplating though is best kept out of corporate hands as they will likely quickly tend to fund white, and those with highest potential. We need a way to demographically (esp racially) democratize who gets a shot. My bet is a disproportionate # of POC are in need.
End of conversation
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