Supportive Concepts for Families, Inc.

Transaction

Supportive Concepts for Families, Inc. ("SCFF"), a Pennsylvania human services organization founded in 1993, has become the nation’s first not-for-profit corporation to sponsor an employee stock ownership program (“C3SOP”).  The C3SOP™ [patent pending] is an adaptation of the familiar ESOP retirement plans currently sponsored by more than 10,000 American corporations. 

In announcing its adoption of the C3SOP, Ryan D. Smith, SCFF’s chief executive officer, noted “The flexible capital our organization will access thru the C3SOP will enable our organization to accomplish two key strategic goals: first, to provide a highly tax efficient, employer funded pension program benefit to our staff that will reward and motivate continued excellence, and secondly to enhance our organization’s capital access in order to finance real estate acquisitions and other investments essential for future growth.”

Employee stock ownership programs are a type of pension plan that are required by law to invest primarily in employer stock, and so sponsorship of such plans by nonprofit corporations is counterintuitive, because nonprofits typically do not issue stock, and in any event are prohibited from distributing profits to owners. The C3SOP corporate structure addresses this issue thru the establishment of a for-profit holding company subsidiary by the nonprofit sponsor, while allowing all employees of the controlled group of corporations to participate in the ESOP.  The inclusion of all of the employees in the controlled group in the ESOP – including the employees of the nonprofit sponsor and its nonprofit affiliates – creates the possibility of broad employee participation and large annual ESOP contributions, and therefore, substantial annual purchases of employer securities.

SCFF’s ESOP strategy includes establishment of a for-profit holding company that controls two for-profit subsidiaries, the largest of which will acquire real estate that will be leased to SCFF.  SCFF will own 51% of the holding company equity, and the ESOP Trust will own the remaining 49%.  The ESOP Trust stock is purchased with the annual retirement plan contributions made to the ESOP Trust by SCFF on behalf of its employees. This structure will enable SCFF to maximize the number of properties it can acquires, both currently and in future years.

Angler West initiated this transaction and provided advisory services pursuant to a licensing agreement with SCFF.  C3SOP is a registered trademark of Angler West Consultants, Inc.  More information concerning C3SOPs may be found at www.c3sop.com.