Nonprofit Joint Venture Agreement

Posted by Admin on Dec 13, 2020 in Uncategorized |

Of course, there are several benefits for not-for-profit organizations in partnering with for-profit developers, but what is there for the profits? For-profit companies may sue joint ventures with non-profit organizations for certain reasons. In some cases, the motive may be purely financial. Non-profit developers have access to unconventional sources of funding, such as . B LIHTC credits (Low Income Housing Tax Credit) or grants that are either outside the borders or much more competitive for for-profit businesses. Local policies may provide development grants to non-profit organizations or give them preference for certain types of real estate construction, so that they have access to real estate that is not available to for-profit partners. Working with a non-profit organization allows a for-profit developer to access these resources for their projects. For example, in 1999, the developer of Indianapolis Monument Realty Management collaborated with the non-profit Riley Area Development Corporation to renovate the historic Davlan Building to create affordable housing. At that time, the procedure for allocating 9% of income tax credits had an explicit preference for municipal development corporations, which made Riley more competitive with tax credits than Monument alone could be. Frequent and clear communication is essential to the success of a common project. Setting expectations from the start requires back and forth, but the work doesn`t stop there. Partners should closely monitor the status of the project and communicate on updates, challenges and issues.

Anderson believes that regular meetings are important to maintain good working relationships between partners. Ryan Oberly, the lawyer for the W-O, recently presented a webinar on joint ventures between tax-exempt organizations and for-profit businesses, in which he briefs on key tax considerations for charities that enter into increasingly frequent agreements. [1] As Oberly has indicated, a non-profit charitable organization that forms a joint venture must retain sufficient control over the joint venture to ensure that the charity`s wealth does not have more than one private benefit. The non-profit organization must also ensure that the company`s activities are primarily linked to the promotion of the charity`s exempt objectives, in particular to avoid possible tax debt on the “income of an independent business.” These basic concepts were established in IRS Ruling 98-15. If the entire patrimony of the non-profit organization is not attributed to the joint venture (ENTREPRISE COMMUNE), the non-profit organization is not required to control the majority of the governing body of the joint venture. However, the non-profit organization must have control over the charitable activities of the joint venture, even if the profits are controlled by the other activities of the joint venture. Murphy sees benefits in joint promotion, both for his company and for the non-profit organizations with which he is a partner. “People may think it`s not because the name [non-profit] is really a profit potential if you work with them, but it`s not. There are many ways for both partners to enjoy. Many businessmen think that if you are partnering with a non-profit organization, it is actually a philanthropic enterprise, and you are going to give your time and resources, but it can be worth it for everyone if you do it right.┬áNon-profit organizations with similar interests can join them through a common management structure, with groups achieving the effectiveness of coordinated back-office operations such as accounting, meeting management, IT, human resources and other support functions, possibly through the ownership of non-profit organizations through a for-profit umbrella organization.

Although there are mechanisms that could

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