Taking Care of Business: Use of a For-Profit Subsidiary by a Nonprofit Organization

Taking Care of Business: Use of a For-Profit Subsidiary by a Nonprofit Organization

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American Bar Association

Revenue generation continues to draw significant attention in the nonprofit sector. Rather than rely exclusively on donations, many nonprofits seek to become self-sustaining through earned income. While in some cases revenue may be generated by activities that clearly further the nonprofits mission, other activities may be desirable primarily for the revenue they produce or involve other aspects that do not fit neatly within a nonprofit (or tax-exempt) framework. In these situations, legal and business factors may favor the creation of a for-profit entity to carry on the activity.

Originally Published: 6/1/14
Global Topics: Ethics and Accountability
Focus Areas: Principles for Good Governance and Ethical Practice
Principles: Category 2: Effective Governance