Thanks, setuptech. This is new to me, although non
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Posted On: 08/16/2021 7:24:03 PM
Thanks, setuptech. This is new to me, although non-profit foundations as related to for-profit corps certainly aren't new to me; I guess it was the idea of acquiring something that had been a separate nonprofit, as opposed to say, a Bank's non-profit charity foundation, built from within, that was new to me...
Can a For-Profit Own a Nonprofit?
A for-profit cannot own a nonprofit because a nonprofit has no owners. However, a for-profit can set up a structure in which it effectively has control over the nonprofit, subject to applicable laws, including those regarding private inurement, private benefit, and corporate self-dealing. Such control structures are perhaps best known between big for-profit companies and their corporate foundations and also between big financial services companies and their donor-advised fund (DAF) sponsoring organizations.
Control may be important to the for-profit for several reasons. The for-profit may have caused the creation of the nonprofit in order to advance a charitable purpose that has some relation to the for-profit’s charitable goals and values. It may also be the nonprofit’s principal funder. Moreover, the nonprofit may be using the name and other assets of the for-profit, which may be providing the for-profit with an important and generally permissible goodwill benefit. It makes sense then that the for-profit will want to be able to ensure that the nonprofit does not pursue activities that are inconsistent with the for-profit’s activities or the for-profit’s vision for the affiliated nonprofit.
But control of the nonprofit by a for-profit also raises some problems. Perhaps the most serious problem is the possibility of the nonprofit being operated for the interests of the for-profit rather than for the broader public’s interests. The greater the control that the for-profit may exercise over the nonprofit, the more scrutiny the nonprofit may receive regarding prohibited private benefit transactions benefiting the for-profit or any owners, board members, or employees of the for-profit.
https://nonprofitlawblog.com/can-a-nonprofit-...nonprofit/
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Can a For-Profit Own a Nonprofit?
A for-profit cannot own a nonprofit because a nonprofit has no owners. However, a for-profit can set up a structure in which it effectively has control over the nonprofit, subject to applicable laws, including those regarding private inurement, private benefit, and corporate self-dealing. Such control structures are perhaps best known between big for-profit companies and their corporate foundations and also between big financial services companies and their donor-advised fund (DAF) sponsoring organizations.
Control may be important to the for-profit for several reasons. The for-profit may have caused the creation of the nonprofit in order to advance a charitable purpose that has some relation to the for-profit’s charitable goals and values. It may also be the nonprofit’s principal funder. Moreover, the nonprofit may be using the name and other assets of the for-profit, which may be providing the for-profit with an important and generally permissible goodwill benefit. It makes sense then that the for-profit will want to be able to ensure that the nonprofit does not pursue activities that are inconsistent with the for-profit’s activities or the for-profit’s vision for the affiliated nonprofit.
But control of the nonprofit by a for-profit also raises some problems. Perhaps the most serious problem is the possibility of the nonprofit being operated for the interests of the for-profit rather than for the broader public’s interests. The greater the control that the for-profit may exercise over the nonprofit, the more scrutiny the nonprofit may receive regarding prohibited private benefit transactions benefiting the for-profit or any owners, board members, or employees of the for-profit.
https://nonprofitlawblog.com/can-a-nonprofit-...nonprofit/
(scroll down)
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