Definition
Programs that help nonprofit organizations and other groups form a separate, proprietary organization whose administrative and programmatic functions they will oversee. The organization can pursue trade or business activities (i.e., activities conducted for the purpose of generating income from the sale of merchandise or performing a service) that are related or unrelated to their exempt purpose without risking their tax exempt status, but must pay taxes on earnings. Other reasons for operating a for-profit subsidiary include ensuring accountability to the Internal Revenue Service (IRS); avoiding the appearance of impropriety to their board, their members and the public; limiting their liability; taking advantage of economies of scale; and gaining flexibility in compensation.
URL Name
TP-4000-8000-200
Third Level Code
TP-4000
Taxonomy Code
TP-4000.8000-200
Parent Code
TP-4000.8000
Family Code
T
Second Level Code
TP
Fifth Level Code
TP-4000-8000-200
Fourth Level Code
TP-4000-8000
Publication Status
Draft