Business Administration: Taxation of Social Enterprises

Explores the balance that organizations try to achieve between the for-profit (business) and nonprofit (charitable) separation of the tax world. Credit not awarded for both BUS 5643 and BUS 3643. Prerequisite: Graduate student or Instructor permission.

Colocated with BUS 3643 OL1; Total combined enrollment = 30; Asynchronous online

This online course explores the balance that organizations try to achieve between the for-profit (business) and non-profit (charitable) separation of the tax world. The course starts by considering how this tax separation affects how for-profit entities account for their charitable activities and society-benefiting efforts (e.g., Google.org vs. the Chan Zuckerberg Initiative). The course then contrasts the treatment of for-profit entities with the concerns of tax-exempt organizations about having to pay tax on certain income and preserving their “exempt” statuses if they seemingly engage in profit-seeking activities (e.g., selling Girl Scout cookies). With this background, the course explores options and risks with various legal structures, such as tax-exempt organizations with for-profit subsidiaries (e.g., Mozilla Foundation’s use of a for-profit subsidiary for the Firefox Web browser), joint ventures between tax-exempt organizations and for-profit entities (e.g., nonprofit hospitals and physician practice groups), and cause-related marketing and qualified sponsorships (e.g., Farrell Distributing and the Vermont Food Bank). Finally, the course introduces tax issues associated with hybrid entities designed to serve both profit- and mission-related objectives, including benefit corporations, low-profit limited liability companies (L3Cs), and flexible purpose corporations.

This course primarily focuses on the federal tax consequences of attempting to combine social missions with business pursuits. Accordingly, the course will explore choices entrepreneurs face about using for-profit entities and tax-exempt organizations, risks and operational issues for a chosen form, structural options for achieving certain objectives, and new hybrids designed for social enterprise ventures. In order to explore these ideas in an online format, this course will ask you to read and view materials from a variety of sources to appreciate tax and non-tax issues that entrepreneurs and accountants should consider with respect to social enterprises.

Grades are determined from online quizzes, Yellowdig discussion posts, and assignments.