Thursday, July 24, 2014

New Ideas in NGO Structure - The Participation Nonprofit

Via Flickr

Robert Shiller, who is an economics prof at Yale, recently wrote a NYT article called "How Donors Give More When They Feel a Sense of Belonging."

Within the article he posits a new form of nonprofit, the participation nonprofit. Rather than request donations, it would sell shares in the nonprofit, though how the valuation would be calculated, I don't know.

Shareholders would attend board meetings and vote their shares - I would assume according to the way the bylaws were setup - to influence governance and spending.

In addition, shareholders would acquire dividends, but the dividends would not be paid to the shareholder but go into a restricted account to be used as the shareholder directs, like having your donation go to a particular program rather than to the general fund.

Professor Shiller thinks that the stock shares could be bequeathed to heirs and the shares could even be sold although the proceeds would also go into a restricted account.

Finally, he notes that, in order to meet with success, shareholders would have to receive a tax deduction for their stock purchases, which are really irrevocable contributions to the charity.

Has your small nonprofit ever considered a nontraditional type of setup? Or tried one? If so, how did it work out?


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