Can a for profit own a non profit and vice versus?

[NorCal]

Can a for profit own a non profit and vice versus?

I have several aspirations, none follow a similar route, so I'm wondering what business structure to form starting out to make things go smooth later on.

Any lessons learned?

I'd like to own a for profit business, while operating a non-profit on the side that supports veterans like me.

Any suggestions would be appreciated. . .

[Paul]

As far as owning different types of companies you may just want to own them seperatly instead of trying to intermingle them. Unless you have a particular strategic reason.

BTW Thanks for your military service.

[Freelancier]

Sounds like maybe you're better served by keeping the paperwork for the two companies separate. No reason you can't own two businesses, one that's for-profit, one that's not, just as long as you don't mess up and shift money between them or to yourself without documenting valid business reasons.

[BizAdvisor]

You can own both a profit and non-profit... Or you can simply do business as a non-profit. You see, non-profit doesn't mean a business cannot make money. It simply means profit isn't the business' primary objective; i.e. you intend to provide some benefit to the public.

[broudie]

Not a lawyer, but what's the point of a for-profit company owning a not-for-profit company?

I can see a non-profit company owning a for-profit company though

[Davidl]

Lets say theres a for profit company called Todd's clothing and a not for profit business that for every item purchased from todds they donate an article of clothes to the poor. That would be one of the ways that the two would be related?

[NorCal]

I have an interest in real estate (regular for profit business) but I also have an interest in forming another business that would build houses for disabled veterans (non profit) with issues related to mobility. I knew a few guys who suffered blasts from IED's and the challenges they faced with mobility and stable housing. Since both are somewhat related, I'm just trying to determine if I could start one entity that could operate both ventures, without mingling the two. Separate entities, separate bank accounts, but both owned under the same umbrella company so to speak?

I work at a non-porfit hospital now, so I am vaguely familiar with the restrictions placed on a 501(c)(3) in terms of revenue and how it can be used; but I'm afraid to say that I know enough to be dangerous but not enough to be good.

[Freelancier]

I get what you're trying to do... I just don't see an explanation about why it's so important to have them both under a single umbrella company. It wouldn't reduce your paperwork. I just don't see what you think is going to be the "win" by doing it this way. Please explain.

[NorCal]

I guess the short answer is branding really. Like Habitat for Humanity. I just want to form two businesses under one corporation, with different DBA's. It might be a stupid idea, but I want to build a brand for both ventures.

[Freelancier]

I want to build a brand for both venturesThen do that. Talk to some marketing people about how a non-profit owned by a for-profit would be perceived by your potential donors. Everything else is just organizational structure that any business lawyer could help you with.

[BizAdvisor]

File a non-profit as a DBA under a corporation..? NO, you don't want to do that. What you need to do is look into forming a corporate foundation for your non-profit.

[BizAdvisor]

Your non-profit needs to be its own legal entity, separate from the parent corporation. A DBA is not a legal entity... Nor separate from the corporation. As a corporate foundation, your non-profit will be both a subsidiary of the parent company and its own legal entity. Does this make sense?

[NorCal]

Thanks for the insight everyone.

[HooktoWin]

Can a for profit own a non profit and vice versus?

I have several aspirations, none follow a similar route, so I'm wondering what business structure to form starting out to make things go smooth later on.

Any lessons learned?

I'd like to own a for profit business, while operating a non-profit on the side that supports veterans like me.

Any suggestions would be appreciated. . .

Hi NorCal, I realize I'm a bit late to the party but I thought I'd chime in.

First off. It's not a stupid idea. If you're using it for the right reason it works beautifully. How do I know?

IKEA.

Ikea is the worlds biggest non-profit / for profit company.


The Ikea Group operates 290 stores across the world.
Ikea Group is owned by Ingka Holding.
But Ingka Holding is owned by the nonprofit Stichting Ingka Foundation.
Money isn’t trapped inside Ikea’s foundation. The Ikea trademark and concept is owned by another private company, Inter Ikea Systems. So just to operate Ikea stores and use the brand name, the nonprofit has to pay each year—payments that, while obscured by corporate structure, most likely make their way back to Ikea founder Ingvar Kamprad and his family.

Source: onlinemba.com (http://www.onlinemba.com/blog/video-why-is-ikea-a-non-profit/)

There are good reasons to use strategies like these.


Asset protection: If you sue the Ikea group, ikea can still open new stores because the ikea group doesn't own the name.
Minimizing taxes: A lot of people raise their eyebrows at a strategy like this because it sounds like tax evasion. It isn't. It's tax minimization. The government still gets their cut in the form of sales and payroll taxes.
Separation of benefits & incentives: As the owner of a company you can (if you choose) offer employees a health plan, while getting yourself and your shareholders on a different plan (sketchy, but not illegal).
Divisions and subsidiaries: You can separate product and service divisions, entry and enterprise divisions or anything as you see fit.


There are downsides to each of these strategies (e.g. difficult, annoying to manage, lots of paperwork) and this list isn't at all comprehensive. Still there are good reasons to doing this and it can work.