Innovative nonprofit leaders frequently leverage so-called “multicorporate structures” to achieve multiple beneficial objectives. May nonprofit corporations do so, such as through forming subsidiaries? If so, when, and why? What are the liability and tax implications? This article describes legal aspects of nonprofit multicorporate structuring generally, then answers each of these questions in turn.
“From our birthday, until we die, / Is but the winking of an eye." - William Butler Yeats
How exciting to start a nonprofit, to dream about all the good to accomplish in the world! The starting passion, joy, and energy drives nonprofit founders to put in the time, effort, sacrifices, and money to create a new organization that will grow, change, and mature, in many ways like a human life will develop or a seed will take root and grow.
What are the legal aspects of a nonprofit corporation’s life cycle? It starts with “birth” or formation, then the first steps of corporate development, and onward into operational governance. Later nonprofit life comes with potential transitions like mergers and multi-entity structuring (i.e., corporate “marriage” and “children” or subsidiaries), and then possibly dissolution (i.e., “death,” at least in the legal sense). Many legal compliance and best practices considerations come into play for each stage.
The year 2021 is quickly winding up, and 2022 is just across the horizon! Our law firm’s attorneys and paralegals deeply value the honor and opportunity to assist so many amazing nonprofit organizations and their incredible leaders, and to help advance their compelling and worthwhile missions. Thank you for this opportunity to serve as trusted legal advisors providing client-focused solutions, creative approaches to advance clients’ interests, and vibrant community engagement to help the nonprofit sector flourish. As a parting gift for this year, we’d like to share some holiday cheer – and what better way than through providing links to some key W&O blog articles across our nonprofit practice groups? We hope the W&O blog will continue to be a valuable resource for you!