CASE STUDY
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Executive Summary: Client wishes to convert to a non-profit.
Challenges: Client’s business has faced severe challenges related to infrastructure and needs community assistance in order to survive and cash flow.
Consultant’s (redacted) e-mail to a Kansas SBDC client on business strategy:
“As we have discussed, you are considering converting your business to a nonprofit. I have prepared the attached document for your review and consideration.
I recommend you consider forming a Public Benefit Corporation (PBC) with a worker cooperative ownership structure. There are several reasons for my recommendation:
– The PBC would allow leeway in board decisions and signal to everyone involved that your focus is on your beneficial mission as well as the interests of the stockholders.
– The worker cooperative could also impact the perception of the (business) as not just a profit-focused business.
– Creating a worker cooperative could open up doors for community investment in the business. You might be able to attract community investment that not only funds the conversion, but could also fund a solution to the (redacted) problem at your venue. I don’t think you can sustain the business without solving this problem, and I think the community will back a solution once they understand the loss to the community if the (business) doesn’t survive.
This is a big decision that will require more analysis of the costs and benefits. I thought the attached document might be a good initial conversation starter with your stakeholders.
I am happy to assist you in exploring these options, or any others you want to pursue.”
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