Creating Subsidiaries of Tax-Exempt Organizations

State Bar of Texas, 15^th Annual Governance of Nonprofit Organizations Course, Austin, Texas, 08/25/2017

Tax-exempt organizations utilize subsidiaries and related organizations for a number of different reasons ranging from management concerns to liability protection to tax necessity. While the nonprofit corporate form is generally used for charitable organizations conducting commercial activities, a number of different forms should be considered for a subsidiary or affiliate organization. This paper and presentation explore many of these considerations while exposing seemingly unforeseen traps, all while being mindful of the ultimate legal issue tax-exempt entities face: “How will this impact our exempt status?”