Forming a for-profit subsidiary can help public charities diversify revenue, attract investors, and limit liability. However, it requires careful planning to maintain tax-exempt status and public trust.
There are various legal, structural, financial, and operational considerations for public charities to consider when determining whether and how to execute the formation of a taxable subsidiary.
Key considerations include:
? Compliance: Protect tax-exempt status with proper structuring.
? Governance: Ensure financial and operational separation.
? Transparency: Document transactions and avoid conflicts of interest.
With the right strategy, this approach can expand impact while safeguarding the mission. For guidance, reach out to Elizabeth Manchester, Russell Stein, Brian Reilly, or Madeline Ursini
PSH’s Nonprofit & Tax-Exempt Group to address the complex legal needs unique to your situation.
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