I have a snack food business that fits a niche, high-end market. I am passionate about community education. My idea is to use the profits from the business to fund the microschool. This model would also employ the parents of the students, and the focus demographic are those which are typically considered to be financially underserved. The school itself would be modeled on the Sudbury Democratic Schools. How would I be able to create a hybrid situation for funding? As in, can I use the profits from the cafe to fund the school, and is it possible to also apply for grants, as we would be revitalizing underserved communities, providing employment as well as educational opportunities directly to families. One idea I had was to collaborate with social services to offer this opportunity. In theory, the microschool would start with 5 families. Once the model is successful, we open another one, and keep "planting seeds" with this model across the US.
Funding a business through another business has legal implications. You need to take care of few things here
1. Ensure the micro school is listed as a subsidiary
2. The funding business is the corporate parent and conglomerate which has rights to distribute funds between its subsidiaries. If not , then you need to create a parent structure first . Eg: Alphabet funding Google business.
3. There is disclosure about this funding and you allocate part of your funds so that school has continued funding
4. Make a resolution with your board of directors and make this part of your regulatory filing
5. If the school is not for profit , then you can consider doing this as a CSR activity . You need a board resolution passed even for this.
Please ensure proper corporate governance is maintained.
Hope this helps . Happy to get On a call if you need more info.
Answered 2 years ago
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