Partnership confusion regarding profits
Posted in the Non-Profit Forum
#1 Jun 28, 2013
I own a company that recently partnered up with a non-profit organization that works with and employs handicapped people. When this partnership began, I was under the understanding that I would be employed as a "coach" to train this organizations handicapped clients in my field of expertise. This provides them with a job, and the opportunity to learn a trade. In exchange, aside from the hourly pay (which of course is very minimal), I would set up shop in their existing building, working with clients already employed by them, as we also settled on a % split on the profits earned, since we provide a service to the community that generates income.
With each passing month I wasn't seeing any of the profits %. I didn't think much of it the first 2 months because we were setting things up, and business was a little slow. After about the 3rd month business started picking up and has ever since, growing with each passing month. By the end of this 3rd month I still had not seen any pay from profits, so I started sending out emails, and making phone calls asking "where's the money". I was informed at that point that their records showed that we hadn't earned any profits yet, though I was. I then requested a break down of where all the profits were being spent. It took 5 months after that to finally receive this vague breakdown of everything. In it, right away, I noticed that in the "state funding" section it showed that this programs funding didn't even cover payroll for myself and their 3 clients. It was averaging $1000 short each month, which they took from our profits to cover. Although, the really big surprise came when I noticed they were charging this program $2500 a month in what they labeled "allocations" for "administration fees". Combining these 2 equaled $3500 a month in instant overhead without even stepping in the door. Then added to that was the expected; utilites, supplies, repairs, etc..
I was never informed of this in our initial meeting about starting this venture. They simply stated "we'll supply the building, the utilities, the workforce, advertising, and start-up fees", and that the building was already owned outright by them, and that they would use existing handicapped clients to fill the positions. They made it sound so golden, as if there was very little overhead, and that it was an amazing opportunity for both parties, and even said just that.
Long story short, I've seen one profits payday in 10 months. I'm stuck between a rock and a hard place now as they keep explaining away the profits to fluctuating "funding" and "allocations", even though they claim they receive the funding by billing the source hourly.
What are your thoughts? Aside from my apparent mistake of not asking enough questions before entering this partnership, does this sound like the norm? Am I just misunderstanding how the whole non-profit world works? Or am I being screwed?
I really appreciate any advice you may have!!
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