ATLANTA – Nonprofits and foundations now seeking new and creative ways to create change are looking more closely at funding mechanisms like benefit corporations and program-related investments that, while they’ve been around awhile, have not been broadly used. However, there’s a growing sense that these tools are meaningful and viable according to John Tyler of the Ewing Marion Kauffman Foundation.
Tyler, who is general council, secretary and chief ethics officer for the foundation, led a recent Brown Bag Conversation hosted by the Andrew Young School’s Department of Public Management and Policy. Introductions were made by professor and department chair Cathy Yang Liu and John O’Kane, a professor of practice in Nonprofit Studies and advisor to Georgia State University’s Nonprofit Leadership Alliance student association.
Tyler provided a brief history of the Ewing Marion Kauffman Foundation, its founder and its focus on education and entrepreneurship. He then led the discussion to newer funding mechanisms he suggested should be more deeply explored.
“We are increasingly seeing nonprofits that want to set up for-profit ventures or work with for-profit entities and set up a venture with them. Or we see nonprofits that have a for-profit or government interest,” he said. “IRS code allows foundations to give grants to these organizations, even if they are a wholly owned for-profit limited liability company. We can do work with these LLCs and corporations, which is not often understood by our sector.”
He suggested the charitable sector find ways to better understand and “get its arms around hybrid middle corporations” like benefit and Low Profit Limited Liability (LC3) corporations, and that university research could help bridge this knowledge gap. He also mentioned the value of training new donors – and those around them – the pros and cons of philanthropy.
“There’s tremendous value in understanding the nonprofit sector,” he said. “It’s an exciting field and changing in so many ways.”