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Team:Arizona State E/CFC
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| - | <i>Figure 2: | + | <i>Figure 2: PharmAfri-Can CFC Model</i> |
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| - | + | Since the US and most other countries do not recognize CFCs as a legal entity in tax code, these corporate structures take advantage of legal partnerships to accomplish a similar purpose. PharmAfri-can accomplishes this task by first developing two separate business entities: a nonprofit foundation and a for-profit company. | |
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| + | *The nonprofit foundation teaches herbal medicine farmers in impoverished regions of Africa better farming techniques to improve crop yields. This allows the farmers to generate a surplus of herbal medicines as sellable product, improving overall quality of life. | ||
| + | *The for-profit company of this foundation would then establish a legal partnership for the nonprofit foundation and purchase the surplus of herbal medicines from the farmers. These medicines would then be sold on the global market. Since the company’s profits are derived from social work, the company in turn pushes in more percentage of their profits back into aiding the farmers to maintain their supply chain. This allows their company to remain strongly committed towards social improvements while not requiring a constant stream of investment thanks to their own sustainable infrastructure. | ||
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Revision as of 11:11, 26 October 2012
ASSET advocates the Community-Focused Corporation model as a solution for not just expanding new markets for distinct technologies in synthetic biology, but also modern business. The structure itself is exactly how it sounds—a public corporation that redirects its primary purpose into developing the community.
The Community Focused Corporation Model
What is it?
A CFC by definition is a corporation that is publically committed to social good.
The corporation declares a particular social focus and develops products dedicated towards solving problems within that focus. A majority share of the profits is then reinvested into developing more solutions while the remainder is utilized the same way as other corporations, whether that is returning dividends to investors or marketing and supply chain operations.
In the UK, a 40% reinvestment of profits is necessary under tax code. In the United States and most other countries, there is no formally recognized legal entity for this structure. Thus, the CFC models described here are legal partnerships between a non-profit organization with a mother for-profit company.
The most important concept to note is that in these models, the majority of the profits do not come from the product itself. Since these are projects with primarily a social focus, the real profit comes from the outcomes of applying these products. This may be hard to understand, but bear with us for a second.
Take for example the structure of the company PharmAfri-can:
Since the US and most other countries do not recognize CFCs as a legal entity in tax code, these corporate structures take advantage of legal partnerships to accomplish a similar purpose. PharmAfri-can accomplishes this task by first developing two separate business entities: a nonprofit foundation and a for-profit company.
- The nonprofit foundation teaches herbal medicine farmers in impoverished regions of Africa better farming techniques to improve crop yields. This allows the farmers to generate a surplus of herbal medicines as sellable product, improving overall quality of life.
- The for-profit company of this foundation would then establish a legal partnership for the nonprofit foundation and purchase the surplus of herbal medicines from the farmers. These medicines would then be sold on the global market. Since the company’s profits are derived from social work, the company in turn pushes in more percentage of their profits back into aiding the farmers to maintain their supply chain. This allows their company to remain strongly committed towards social improvements while not requiring a constant stream of investment thanks to their own sustainable infrastructure.
