Thursday, August 18, 2011

GOOD/Jumo Merger Raises Interesting Charitable Asset Questions

The NY Times reports that the for-profit company GOOD, a self-described "integrated media platform for people who want to live well and do good," is acquiring nonprofit charity Jumo, a social networking platform that "enables people to find organizations and similarly minded people working on important causes here in the United States and across the world."  The deal apparently arose out of Jumo's struggle to find a viable and distinctive role in the growing nonprofit social media space.  While the terms of the deal are not known, it is clear that any money paid to Jumo will need to continue to be dedicated to charitable purposes.  Such deals of course raise significant valuation issues, as well as the risk of excessive consulting contracts or other payments to charity insiders to facilitate the deal.  In this case, the situation may also be complicated by the fact that Jumo was funded to the tune of $3.5 million by several foundations, including the Ford Foundation, the Omidyar Network, and the John S. and James L. Knight Foundation.  While the article quotes the last foundation as applauding the deal, it is not clear how the two other named foundations view it.


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