Legal Question in Business Law in California

Joint Ventures for Non-Profits

I had a gentlemen come to my office offering to do a joint venture with the non-profit I manage. His for profit investment group wants to buy buildings and properties with non-profits (501c3) and after 3-5 years turn the property over to the non-profit group involved.

Is this legal, and what are the laws that govern non-profits (501c3) involvement in joint ventures?


Asked on 11/24/99, 3:40 pm

1 Answer from Attorneys
Gregory Brittain Gregory W. Brittain, Attorney at Law

Re: Joint Ventures for Non-Profits

In principle it is possible for a non-profit to joint venture with a for-profit. In any joint venture, for-profit or non-profit, do your due diligence regarding the joint venture and your joint venture participants. Your board should make findings that the joint venture serves the purposes of your non-profit organization. You should have a good joint venture agreement specifying who will do what, who will invest what, who will control and make decisions and who will receive what.

You should also consult a CPA or tax attorney regarding the tax consequences. Without limitation, there may be unrelated business income tax.

This reply is a courtesy and does not create an attorney client relationship.

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Answered on 11/29/99, 7:12 pm


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