By Patrick Terry, CPA
Windham Brannon participates with the Atlanta Tech Village as an advisor to its member Villagers, along with other professionals from around the Atlanta metropolitan area.
Atlanta Technology Village (ATV) is an organization setup to support entrepreneurs to achieve success through a community that promotes faster connections between talent, ideas and capital.
A part of the community benefits to the members or Villagers is the access to mentors and advisors, like Windham Brannon.
Advisors to ATV agree to participate in office hours at ATV on at least a monthly basis, where Villagers may seek out advice and direction on a variety of common startup business issues, free of charge. Villagers are often the founders of a startup and are managing multiple roles, CEO, CFO, HR, CTO and CSO. That means the challenges are immense and diverse, requiring access to specialized knowledge in many areas.
Most initial meetings with Villagers evolve into a need for recurring meetings to provide the guidance necessary. Meetings like this also provide opportunity for identifying blind spots that may need collaboration with other advisors.
Finding Solutions, Impacting Community
During a recent meeting with a Villager, we needed to determine the best way to structure transactions between the startup and sponsors of its customers, which maintained a charitable characteristic for Internal Revenue Service (IRS) purposes. The startup provides a phone application to its customer’s users, which provides for the users to interact socially and have access to news and a calendar of events the customer has. By using the application, users are provided an opportunity to direct funding supplied by sponsors to the various programs the customer may have, empowering the user. Since the customers are recognized charities, the funding by sponsors is ordinarily deductible as a charitable donation. However, since the funding would go to the customer after allocated by the users, deductibility was not ensured.
Innovating and Collaborating for Business Success
After the initial meeting and the issue was identified, Windham Brannon went to work on advising the startup on the best method to structure the transaction to maintain the deductibility. The solutions provided were for both a short and long-term perspective, as the startup already has a sponsor ready to contribute to a customer.
The short-term solution involved finding another registered charity to collect and then disburse the funds in accordance with the user’s selections. The long-term solution required the startup to create another charitable entity to solely collect and disburse the funding from the sponsor.
This long-term solution mitigated the cost a third-party charitable entity may charge, increasing the amount of funding that made it to the customer.
Subsequently, the startup began utilizing the short-term solution as a proof of concept and is currently signing up more sponsors. If the growth continues, it plans on pursuing the long-term approach.
Without the creativity of Windham Brannon, all of the good created by the startup’s first generous sponsor may not have been possible, not to mention all of the potential results yet to come.