Balanced Arts Center is a small business for-profit entity in New York City that is starting to expand its business to serve more people. We are now in the beginning stage of looking for funding for this expansion and believe part of the funding will have to come through grants. We have a nonprofit partner organization that has agreed to run donations through its tax exempt entity and pass the funds through us by grant. What are your thoughts on this arrangement? - Ann, Balanced Arts Center
Ann, although you may receive a contract or grant to carry out work on behalf of the nonprofit partner, I urge you caution. I would advise you to meet with an attorney that understands nonprofit tax regulations and/or a tax specialist. You will need their expertise to ensure that you have a proper relationship with the nonprofit partner and raise funds according to regulations.
As an alternative to acquiring grants, you may want to consider a small business loan, especially one created for women-owned businesses. In addition, if you have students that are interested in investing in the business, you may want to approach them regarding a loan or ownership interest. Of course, if you are able to grow organically you will be able to retain greater control over your business, but the growth may be slower.