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Can a Non-Profit Organization own a For-Profit Business?

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      CommentAuthorquartz
    • CommentTimeApr 1st 2008
     
    Can a 501 [nonproift status] own a business that is for- profit.

    Example ... Non Profit is animals protection related and For-Profit Business is renatl building - Can the non-profit own that building?

    Thanks!
    • CommentAuthorKayza
    • CommentTimeApr 3rd 2008
     
    It can probably own it. But, as it is probably considered an "unrelated activity", it would have some fairly substantial tax ramifications.
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      CommentAuthorquartz
    • CommentTimeApr 10th 2008
     
    Thank you Kayza
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      CommentAuthorkeystone1
    • CommentTimeApr 10th 2008
     
    I do not believe so. I think that that only "merging" of a non-profit and for profit business is called an LLC.
  5.  
    Absolutely, a lot of nonprofits have for-profit arms which help support the nonprofit (lots own buildings, hospitals and hospices have gift shops and thrift stores, Dress for Success has a clothing line, etc.). Where it does get tricky is in the reporting of the income for tax purposes. I'm not sure where rentals fall, but if you cannot justify that the business is part of your non-profit mission, it will be considered "Unrelated Taxable Income" and you will have to pay taxes on that, as any other business would (though, there's no penalty or anything, it's the same as any other business). Find yourself a good accountant and they'll be able to help you out quite a bit, because the only real hurdle is in the accounting/taxes. But the short answer is Yes!

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