Should be able to. Haven't set it up yet.
I’m 99% certain there’s nothing wrong with having a 501c3 tied to benefit a specific subset of people tied to a for profit corp. the funds can’t benefit a single specific person, but obviously that’s different
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I mean if my sister was going ITT Tech and she died I can absolutely start a 501c3 that will help more students attend ITT Tech
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I would be sad if your sister got scammed by ITT
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Haha me too. I’m trying to push to the ends of the law :)
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If the intent is to return the capital to investors, it's not being donated. Therefore there is no benefit to being tax deductible and the headache of running a federal nonprofit is totally not worthwhile. Just run this as a P&L in Lambda School. A not-for-profit P&L.
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Funding model is each funder (or group thereof) writes a note with the student, and you guarantee the note. Eventually you'll figure out what your default rate is and price it in.
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With option 2 no capital is ever returned to investors or Lambda
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How so? The note has an interest rate. Principal and interest are returned. You take an origination fee at Lambda to cover default risk. Likely you can partner with private student lenders but at higher costs to the students.
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2 would be a donation to an endowment where you can’t take out the returns
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The idea of an endowment is generally to have money you invest (and generate returns from) to fund ongoing operations. You could invest it in a housing program but I think there are better/simpler ways to solve this problem.
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Yeah endowment isn’t the right word. Just mean fund you donate to and you don’t get paid back out of.
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Why is this superior to debt funding? The main cost driver is lack of a guarantor, but you already have skin in the game with these students. Is co-signing a much bigger risk than you are already taking?
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They can't benefit a single specific legal person (the four profit) either. Which is where the concern with complementary comes in. If you are 99% sure then would you take a bet at 50:1 odds for 100 dolkars about this and we ask an accountant?
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With the one caveat being that the 501c3 doesn’t have to be owned by or a subsidiary of the for profit Corp. can be independently established and benefit the corp.
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I think you will get pushback from the IRS on the complement angle, but best of luck. Let me know how it goes (if I was not eu based and this times don't if have applied to teach lambda school, really like the comcept)
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