CHAPTER 22Relationships with Other Organizations and Businesses

As a nonprofit organization gains maturity and complexity, its board and/or its staff may wish to undertake an activity not appropriate for the organization itself, but suitable for another form of organization. To accomplish that objective, there are two classic types of reorganizations or spin-offs: One is to form a title-holding company1 or a supporting organization2 to hold assets and/or to raise funds to hold for the benefit of the organization. The other common step is for an Internal Revenue Code (IRC) §501(c)(3) organization to form a §501(c)(4) organization to conduct lobbying activities that would be impermissible for a charitable organization for the reasons outlined in Chapter 23.

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