Yes, a nonprofit can have a nonprofit subsidiary. Under Section 501(c)(3) of the Internal Revenue Code, a tax-exempt parent organization has the legal right to create, control, and operate a separate nonprofit entity as a subsidiary. The parent nonprofit exercises control not through ownership (since nonprofits cannot be “owned”) but through governance mechanisms like the power to appoint and remove the subsidiary’s board of directors.
The IRS requires that any nonprofit subsidiary maintain its own bona fide programs and activities that are distinct from the parent. If the two entities blur their boundaries, the IRS may treat them as a single organization — putting the parent’s tax-exempt status at risk. According to a report from the National Council of Nonprofits, over 1.8 million tax-exempt organizations operate in the United States, and a growing number use multicorporate structures involving subsidiaries.
Here is what you will learn:
- 📋 The legal rules that allow a nonprofit to form a nonprofit subsidiary under federal and state law
- 🛡️ How to protect the parent nonprofit’s tax-exempt status when creating a subsidiary
- ⚖️ The key differences between nonprofit subsidiaries, for-profit subsidiaries, and single-member LLCs
- 🚫 Costly mistakes that can cause the IRS to revoke a parent nonprofit’s exemption
- 💡 Real-world examples of hospitals, universities, and chambers of commerce using subsidiary structures
What Federal Law Says About Nonprofit Subsidiaries
The IRS does not have a single statute that says “nonprofits may form subsidiaries.” Instead, the legal authority comes from a combination of corporate law principles and IRS administrative rulings. Under IRS regulations for 501(c)(3) organizations, a tax-exempt organization must be organized and operated exclusively for exempt purposes. The IRS defines “exclusively” as “primarily,” meaning that not every activity must be charitable — but the core mission must remain front and center.
A parent nonprofit creates a subsidiary to separate certain activities, limit legal liability, or pursue a related but distinct mission through a new entity. The subsidiary can be a separate nonprofit corporation, a single-member LLC, or even a for-profit corporation. Each structure carries different tax consequences, liability protections, and levels of IRS scrutiny.
The IRS has consistently allowed nonprofits to form and capitalize subsidiaries as long as doing so furthers the parent’s exempt mission. IRS Letter Rulings 9316052 and 9240001 confirm that exempt parents may form, capitalize, and operate an affiliate corporation if it serves a charitable purpose. The key requirement is that both entities must operate as genuinely separate organizations.
How a Nonprofit Controls Its Nonprofit Subsidiary
A nonprofit parent does not own its subsidiary the way a for-profit corporation owns a for-profit subsidiary. Nonprofits cannot legally be “owned” by any person or entity because they exist to serve the public good. The parent nonprofit instead exercises control over the subsidiary through its corporate bylaws and governance documents.
The most common control mechanisms include the parent’s power to appoint and remove the subsidiary’s board of directors, the right to approve changes to the subsidiary’s articles of incorporation or bylaws, and the authority to approve major financial decisions. This governance-based control gives the parent meaningful oversight without creating a traditional ownership relationship.
This distinction matters for liability purposes. Because the parent only controls the subsidiary rather than owns it, creditors of the parent generally cannot reach the subsidiary’s assets to satisfy the parent’s debts. The reverse is also true — creditors of the subsidiary typically cannot go after the parent’s assets.
Why the Board Structure Matters
The IRS pays close attention to how much the parent’s and subsidiary’s boards overlap. When parent and subsidiary organizations have different tax-exempt statuses, too much board overlap raises red flags. The IRS may conclude that the subsidiary is not truly independent and is merely operating as an arm of the parent.
It is generally advisable to have at least one or two independent people on the subsidiary’s board who are not also on the parent’s board. These independent directors carry out due diligence, review transactions between the two entities, and ensure the subsidiary is not being used improperly.
Having a completely identical board for both parent and subsidiary is not automatically illegal. But it significantly increases the risk that the IRS will view the two entities as one — especially if they also share office space, staff, and bank accounts.
Three Types of Subsidiary Structures Nonprofits Can Use
Nonprofits have three main options when forming a subsidiary: a separate nonprofit corporation, a single-member LLC, or a for-profit corporation. Each one serves a different purpose and comes with unique tax and legal consequences.
Option 1: Nonprofit Corporation Subsidiary
A parent nonprofit can create a brand-new nonprofit corporation that files its own Form 1023 with the IRS to obtain separate 501(c)(3) status. This subsidiary operates as its own legal entity with its own EIN, board of directors, and annual Form 990 filing requirement. The parent controls the subsidiary through the subsidiary’s bylaws.
This structure works best when the subsidiary’s programs are distinct enough from the parent’s mission that they deserve their own identity. Many large hospital systems and university foundations use this approach. The subsidiary gets its own donor base, its own branding, and its own public charity status.
Option 2: Single-Member LLC (Disregarded Entity)
A single-member LLC owned by a nonprofit parent is treated as a “disregarded entity” by the IRS. This means the LLC does not exist as a separate entity for federal income tax purposes. The LLC’s income, expenses, and activities are reported on the parent’s Form 990. The LLC does not need to obtain its own separate tax-exempt determination letter from the IRS.
Since 1999, the IRS has treated single-member LLCs owned by tax-exempt organizations this way under Announcement 99-102. The LLC benefits from the parent’s tax-exempt status automatically. This makes the single-member LLC the simplest and fastest way for a nonprofit to create a subsidiary.
The tradeoff is that all activities of the LLC are attributed to the parent for tax purposes. If the LLC earns unrelated business income, that income flows up to the parent and may be subject to unrelated business income tax (UBIT). The LLC does not provide a “tax shield” the way a separate for-profit subsidiary does.
Option 3: For-Profit (Taxable) Subsidiary
A nonprofit can also create a for-profit subsidiary to conduct business activities that are unrelated to its exempt mission. These taxable subsidiaries are sometimes called “UBIT blockers” because they prevent unrelated business income from flowing up to the parent and threatening its exempt status. The subsidiary pays corporate income tax on its own earnings at standard rates.
The IRS allows this structure but warns that certain conduct can jeopardize the parent’s exemption. The for-profit subsidiary must have real and substantial business functions of its own. If the IRS finds that the subsidiary is merely acting as the parent’s agent, it will attribute the subsidiary’s activities to the parent.
| Subsidiary Type | Tax Treatment |
|---|---|
| Nonprofit Corporation | Separately tax-exempt; files own Form 990 |
| Single-Member LLC | Disregarded; reported on parent’s Form 990 |
| For-Profit Corporation | Taxable at corporate rates; files own tax return |
Why Nonprofits Create Subsidiaries: The Top Reasons
Nonprofit leaders do not form subsidiaries just for the sake of having them. Every subsidiary adds administrative costs, governance complexity, and compliance obligations. The decision to create one usually comes down to a specific need that cannot be met within the existing organization.
Shielding Assets From Lawsuits
The most common reason is liability protection. A nonprofit running a high-risk program — like a summer camp for children or a healthcare clinic — faces potential lawsuits that could put all of its assets at risk. By placing that program inside a separate subsidiary, the parent’s assets are insulated from claims against the subsidiary.
If someone sues the subsidiary, only the subsidiary’s assets are at risk — not the parent’s real estate, endowment, or savings. This legal wall only holds, though, if the two entities maintain proper corporate formalities.
Protecting Tax-Exempt Status
A nonprofit that earns too much unrelated business income risks losing its exemption. The IRS applies the “primary purpose test” to make sure the nonprofit is focused on its exempt mission, not on running a commercial business. If the commercial activity becomes more than insubstantial, the IRS can strip the exemption.
Forming a for-profit subsidiary lets the nonprofit keep its commercial activities in a separate legal box. The subsidiary pays taxes on that income. The nonprofit keeps its focus — and its exemption.
Expanding Into New Mission Areas
Sometimes a nonprofit’s work grows beyond its original charter. A 501(c)(3) charity that wants to do significant lobbying, for example, might create a 501(c)(4) social welfare subsidiary. A chamber of commerce organized under 501(c)(6) might create a 501(c)(3) subsidiary to accept tax-deductible charitable donations for educational programs.
Building a Separate Endowment
Established nonprofits sometimes create a subsidiary specifically to hold and manage a long-term endowment. This separates investment assets from the parent’s operating activities. It also provides a distinct brand for major gift campaigns, which can appeal to high-net-worth donors.
Real-World Examples of Nonprofit Subsidiaries
Hospital Systems
Nonprofit hospital systems are among the most common users of subsidiary structures. Kaiser Foundation Hospitals operates 36 hospitals as a nonprofit parent with subsidiary entities generating over $54 billion in revenue. The Mayo Clinic, University of Pittsburgh Medical Center, and Cleveland Clinic all use complex multicorporate structures with multiple nonprofit subsidiaries. Each subsidiary hospital may have its own board, its own Form 990, and its own community benefit programs — while the parent provides centralized leadership and strategic direction.
Chambers of Commerce and Foundations
A 501(c)(6) chamber of commerce often creates a 501(c)(3) charitable subsidiary to run educational workshops, scholarships, or community programs. The chamber maintains control of the subsidiary through board appointment rights. Donors can then make tax-deductible contributions to the 501(c)(3) subsidiary, which they could not do to the 501(c)(6) parent.
This arrangement requires strict boundaries. The 501(c)(3) subsidiary cannot be used simply as a pass-through to fund the chamber’s non-charitable activities. It must have its own distinct programs and its own reason for existing.
Universities and Research Institutions
Major universities frequently use nonprofit subsidiaries to manage technology transfer, real estate holdings, and athletic programs. A university foundation, for example, may operate as a separate 501(c)(3) from the university itself. The foundation focuses on fundraising and endowment management while the university focuses on education and research.
Three Scenarios That Show How This Works
Scenario 1: The Growing Food Bank
Maria runs a 501(c)(3) food bank. The food bank wants to open a commercial catering business to generate revenue. Maria’s attorney advises her to form a for-profit subsidiary to run the catering business. The food bank retains control of the subsidiary’s board.
| Decision | Outcome |
|---|---|
| Form a for-profit subsidiary for the catering business | Catering income is taxed at corporate rates; food bank’s exemption is protected |
| Run the catering business inside the food bank | Risk exceeding the “primary purpose test”; IRS may revoke 501(c)(3) status |
| Share all staff and office space without formal agreements | IRS may “attribute” catering activity to the food bank, creating UBIT liability |
Scenario 2: The Chamber With Big Ambitions
David leads a 501(c)(6) trade association. Members want to start awarding educational scholarships. David creates a 501(c)(3) nonprofit subsidiary to handle the scholarship program. He puts two independent board members on the subsidiary’s board.
| Decision | Outcome |
|---|---|
| Create a 501(c)(3) subsidiary with independent board members | Donors get tax deductions; scholarship program has clear charitable purpose |
| Run scholarships through the 501(c)(6) parent | Donations are not tax-deductible; potential confusion over exempt purpose |
| Use identical boards for both organizations | IRS may question whether the subsidiary is truly independent |
Scenario 3: The Nonprofit With a Risky Program
Lisa’s 501(c)(3) youth organization wants to start an adventure camp with rock climbing and kayaking. The liability risk is significant. Lisa creates a single-member LLC owned by the parent nonprofit to run the camp.
| Decision | Outcome |
|---|---|
| Form a single-member LLC for the adventure camp | LLC’s liability stays separate from parent; LLC is “disregarded” for tax purposes |
| Run the camp directly under the parent nonprofit | A lawsuit from a camp injury could put all parent assets at risk |
| Fail to maintain separate bank accounts and records for the LLC | A court may “pierce the corporate veil” and hold the parent liable anyway |
The IRS Group Exemption: A Special Path for Subsidiaries
The IRS offers a group exemption process that allows a central parent organization to extend its tax-exempt status to its subsidiary or chapter member organizations. This saves each subsidiary from having to file its own Form 1023 application. The parent files a single group exemption letter that covers all qualifying subordinate organizations.
There are important limits. The IRS still requires each subsidiary covered by a group exemption to file its own annual 990-series information return in many cases. Some group exemption holders consolidate returns, but this is not automatic.
Grant funding can be delayed for subsidiaries under a group exemption. Private foundations verify a nonprofit’s status by checking the IRS Business Master File (BMF). Subsidiaries under a group exemption are not added to the BMF until the parent files the annual group exemption update — and until the IRS processes it. This can take months, leaving the subsidiary unable to prove its status to grantmakers.
Corporate Formalities That Keep the Structure Intact
Forming a subsidiary is only half the battle. The other half is maintaining the legal separation between parent and subsidiary over time. If the two entities start acting like a single organization, a court can “pierce the corporate veil” and eliminate the liability protection entirely.
Both entities should follow these corporate formalities:
- Be sufficiently capitalized with their own funds
- Have their own governing documents (bylaws or operating agreements)
- Have clearly identified leadership (directors and officers)
- Maintain separate bank accounts
- Conduct operations under their own entity names
- Hold their own board meetings and keep separate minutes
- Enter into contracts and agreements in their own names
- Maintain their own corporate records
Any shared services — such as office space, accounting staff, or IT support — should be documented in a formal cost-sharing agreement. The parent must be reimbursed at full fair market value for any goods or services provided to the subsidiary. Payments should be made on an actual-use basis, not by rough allocation.
State Law Requirements You Cannot Ignore
Federal law governs the tax side of nonprofit subsidiaries. State law governs the corporate side — formation, registration, and ongoing compliance. Every state has its own nonprofit corporation statute, and the rules vary.
California
California requires nonprofits to form under the California Corporations Code, which has specific rules about nonprofit names, purposes, and governance. Under Section 5122, a subsidiary’s name cannot be identical or confusingly similar to an existing corporation in the state. California also has strict rules about transferring assets from a nonprofit parent to any subsidiary, especially a for-profit one.
New York
New York requires nonprofit corporations to file a Certificate of Incorporation with the Department of State and obtain approval from the state Attorney General’s office for certain types of charitable organizations. If a parent nonprofit creates a subsidiary that will solicit donations in New York, the subsidiary may need its own separate charitable solicitation registration — even if the parent is already registered.
State Charitable Solicitation Registration
Most states require nonprofits that solicit donations to register with the state. When a parent creates a subsidiary, some states allow the parent to add the subsidiary’s name to the parent’s existing registration. Other states require completely separate registrations for each entity. Failing to register is a legal violation that can result in fines and enforcement action.
Mistakes to Avoid When Creating a Nonprofit Subsidiary
These errors are among the most common — and the most costly:
1. Running identical operations in both entities. The subsidiary must have a clear set of bona fide programs that are distinct from the parent. If both organizations do the same thing, the IRS sees no legitimate reason for the subsidiary to exist and may collapse the structure.
2. Sharing bank accounts. Commingling funds between parent and subsidiary destroys the legal separation. A court will point to shared bank accounts as strong evidence that the subsidiary is just an alter ego of the parent.
3. Failing to hold separate board meetings. Both entities need their own meeting minutes, their own resolutions, and their own documented decisions. Rubber-stamping the parent’s decisions at the subsidiary level is not enough.
4. Using the subsidiary to enrich insiders. The IRS watches closely for founders who create subsidiaries to benefit themselves. This triggers intermediate sanctions under §4958 and can result in excise taxes and loss of exemption.
5. Ignoring state registration requirements. Even if the IRS recognizes the subsidiary as tax-exempt, the subsidiary must still separately incorporate at the state level and comply with state charitable solicitation laws. Skipping this step exposes the subsidiary — and its directors — to legal liability.
6. Letting the parent manage the subsidiary’s daily operations. When the parent is directly involved in day-to-day management of the subsidiary, the IRS may disregard the subsidiary as a separate entity. The subsidiary’s board must make its own operational decisions.
7. Creating a subsidiary without legal counsel. Multicorporate nonprofit structures involve federal tax law, state corporate law, and governance complexity. An attorney familiar with both corporate and nonprofit law should be involved from the start.
Do’s and Don’ts for Nonprofit Subsidiaries
| Do ✅ | Don’t ❌ |
|---|---|
| Do maintain separate bank accounts, records, and EINs for each entity — this is the foundation of legal separation | Don’t commingle funds between parent and subsidiary — this destroys the liability shield |
| Do have at least some independent directors on the subsidiary’s board — this shows the IRS the subsidiary is truly separate | Don’t use identical boards for both entities if they have different exempt statuses — this invites IRS scrutiny |
| Do execute a formal cost-sharing agreement for any shared services — this documents arm’s-length transactions | Don’t let the parent manage the subsidiary’s daily operations — this causes attribution of activities |
| Do file all required state and federal registrations for the subsidiary — each entity has its own compliance obligations | Don’t assume the subsidiary is automatically covered by the parent’s state registrations — many states require separate filings |
| Do consult an attorney experienced in nonprofit and tax law before forming a subsidiary — the legal structure must be right from day one | Don’t form a subsidiary just to enrich insiders or avoid accountability — the IRS imposes severe penalties for abuse under §4958 |
| Do ensure the subsidiary has its own distinct programs and mission — this justifies its existence to regulators and donors | Don’t run the same programs in both entities — this gives the IRS a reason to collapse the structure |
Pros and Cons of a Nonprofit Subsidiary
| Pros ✅ | Cons ❌ |
|---|---|
| Liability protection — a lawsuit against the subsidiary does not reach the parent’s assets | Added cost — the subsidiary needs its own legal filings, accounting, and potentially its own staff |
| Tax-exempt status protection — commercial activities can be placed in a subsidiary to keep the parent’s exemption safe | Governance complexity — the parent must manage two (or more) boards, sets of minutes, and compliance calendars |
| Mission expansion — the subsidiary can pursue a related but different exempt purpose (e.g., 501(c)(4) lobbying arm) | IRS scrutiny — the IRS examines parent-subsidiary relationships closely, especially for board overlap and shared operations |
| Donor appeal — a separate 501(c)(3) subsidiary can accept tax-deductible donations that the parent (if a 501(c)(6)) cannot | Delayed grant funding — subsidiaries under group exemptions may not appear on the IRS Business Master File for months |
| Endowment separation — investment assets can be held in a separate entity, protecting them from operational liabilities | Piercing risk — if corporate formalities are not followed, a court can eliminate the legal separation between entities |
Step-by-Step: How to Create a Nonprofit Subsidiary
Step 1: Determine the right structure. Decide whether the subsidiary should be a nonprofit corporation, a single-member LLC, or a for-profit corporation. This choice depends on the activities the subsidiary will conduct, the level of liability protection needed, and the desired tax treatment.
Step 2: Engage legal counsel. Retain an attorney who understands both nonprofit corporate law and federal tax-exempt law. The attorney will draft formation documents and ensure compliance with IRS requirements.
Step 3: Draft and file articles of incorporation (or articles of organization for an LLC). File these documents with the Secretary of State in the state where the subsidiary will be formed. Include a purpose clause that is consistent with the subsidiary’s intended exempt status.
Step 4: Adopt bylaws or an operating agreement. The subsidiary’s governance documents should spell out the parent’s control rights — including the power to appoint and remove directors, approve amendments, and approve major transactions. For an LLC, these terms go in the operating agreement.
Step 5: Obtain an EIN. The subsidiary needs its own Employer Identification Number from the IRS. A single-member LLC that will be treated as a disregarded entity may not need a separate EIN for federal tax purposes, but it will likely need one for state tax and employment purposes.
Step 6: Apply for tax-exempt status (if applicable). If the subsidiary is a separate nonprofit corporation, it must file Form 1023 or Form 1023-EZ with the IRS to obtain its own 501(c)(3) determination letter. If the subsidiary is a single-member LLC, no separate application is needed because the LLC is disregarded for tax purposes.
Step 7: Capitalize the subsidiary. The parent should formally document any transfer of funds to the subsidiary. If the parent loans money, the loan must be at arm’s-length terms with a written agreement, a stated interest rate, and a repayment schedule.
Step 8: Open separate bank accounts. The subsidiary must have its own bank account. Every dollar in and out should flow through the subsidiary’s account — not the parent’s.
Step 9: Register with the state. If the subsidiary will solicit donations, register with the state’s charitable solicitation office. Check whether the state requires a separate registration or allows the subsidiary to be listed on the parent’s registration.
Step 10: Begin operations and maintain formalities. Hold the subsidiary’s first board meeting, adopt initial resolutions, and begin conducting activities. Maintain ongoing compliance with both federal and state requirements, including annual Form 990 filings and state annual reports.
Key Court Rulings and IRS Guidance
Britt v. United States (5th Circuit, 1970)
This case established that the IRS can look beyond the corporate form when a subsidiary lacks “real and substantial business functions.” The court held that if a subsidiary exists only on paper and the parent controls everything, the two entities will be treated as one for tax purposes.
IRS Private Letter Ruling 8606056
In this ruling, the IRS examined a scientific research organization and its subsidiary. The subsidiary developed products using the parent’s technology. Because the parent maintained a controlling interest, the two entities shared employees, and they used the same facilities and equipment, the IRS attributed the subsidiary’s activities to the parent. This ruling is a cautionary tale about what happens when the parent fails to maintain separation.
IRS General Counsel Memorandum 39598
This memo laid out the factors the IRS considers when deciding whether to attribute a subsidiary’s activities to its parent. The factors include board overlap, day-to-day management control, arm’s-length transactions, and the similarity of activities between the two entities. No single factor is decisive — the IRS weighs them all together.
IRS Announcement 99-102
This announcement confirmed that single-member LLCs owned by tax-exempt organizations are treated as disregarded entities for federal income tax purposes. It opened the door for nonprofits to use LLCs as subsidiaries without applying for a separate determination letter.
How UBIT Affects Nonprofit Subsidiaries
Unrelated Business Income Tax (UBIT) is the tax that nonprofits pay on income from activities that are not related to their exempt purpose. UBIT is a major reason why nonprofits create subsidiaries in the first place.
If a nonprofit runs a commercial business inside its own organization, that income is subject to UBIT. If the nonprofit earns too much unrelated business income, the IRS may decide the organization is no longer “primarily” focused on its exempt purpose — and revoke its exemption. This is where a for-profit subsidiary becomes valuable.
A for-profit subsidiary pays its own corporate income tax on business earnings. The subsidiary can then distribute post-tax profits to the parent nonprofit as dividends. Under IRC §512(b)(13), certain payments from a subsidiary to its parent — such as interest, rent, royalties, and annuities — are generally taxable to the parent. There is an exception when the subsidiary’s activities are related to the parent’s exempt mission.
With a single-member LLC (disregarded entity), the situation is different. Any unrelated business income earned by the LLC flows directly onto the parent’s Form 990 and is subject to UBIT. The LLC does not serve as a UBIT blocker. It provides liability protection but no tax separation.
| Structure | UBIT Protection |
|---|---|
| For-Profit Subsidiary (C-Corp) | Strong — subsidiary pays its own tax; income does not flow to parent |
| Single-Member LLC (Disregarded) | None — all income flows to parent; UBIT applies to unrelated income |
| Separate Nonprofit Corporation | Moderate — if subsidiary has its own exemption, related income is not taxed |
FAQs
Can a 501(c)(3) own another 501(c)(3)?
No, not technically. A 501(c)(3) cannot own another nonprofit because nonprofits have no owners. A 501(c)(3) can control another 501(c)(3) through board appointment power and governance documents.
Does a nonprofit subsidiary need its own EIN?
Yes, a separately incorporated nonprofit subsidiary needs its own Employer Identification Number. A single-member LLC treated as a disregarded entity may not need one for federal tax purposes but likely needs one for state purposes.
Can a nonprofit subsidiary have the same board as the parent?
Yes, but it is risky. Too much board overlap can cause the IRS to question whether the subsidiary is truly independent, especially when the two entities have different tax-exempt statuses.
Does a nonprofit subsidiary file its own Form 990?
Yes, if it is a separately incorporated nonprofit with its own EIN and determination letter. A single-member LLC that is disregarded does not file its own Form 990 — its activity is reported on the parent’s return.
Can a nonprofit create a for-profit subsidiary?
Yes. The IRS allows nonprofits to form for-profit subsidiaries to conduct unrelated business activities. The subsidiary pays corporate income tax, protecting the parent’s tax-exempt status.
Does a single-member LLC need to apply for 501(c)(3) status?
No. A single-member LLC owned by a 501(c)(3) is a disregarded entity. It automatically receives the benefit of its parent’s tax-exempt status without filing Form 1023.
Can a 501(c)(6) create a 501(c)(3) subsidiary?
Yes. This is common among chambers of commerce and trade associations. The 501(c)(3) subsidiary can accept tax-deductible donations and run charitable or educational programs.
What happens if the parent and subsidiary commingle funds?
Yes, there are consequences. Commingling funds can cause a court to “pierce the corporate veil,” eliminating liability protection. The IRS may also treat both entities as a single organization.
Can a nonprofit subsidiary operate in a different state than the parent?
Yes. The subsidiary can incorporate in any state. It will need to comply with that state’s nonprofit corporation laws and may need to register as a foreign corporation in the parent’s state.
Is a group exemption the same as forming a subsidiary?
No. A group exemption lets a parent extend its tax-exempt status to subordinate chapters. A subsidiary is a separately formed legal entity controlled by the parent through governance documents.
Related reading
- Can a Nonprofit Operate Without a 501(c)(3)? (w/Examples) + FAQs
- Can Nonprofits Have Shareholders? (w/Examples) + FAQs
- Are Nonprofits Corporations? (w/Examples) + FAQs
- How Does a Business Qualify as a Nonprofit? (w/Examples) + FAQs
- Can a For-Profit Have a Nonprofit Subsidiary? (w/Examples) + FAQs
- Can an LLC Have a Nonprofit Subsidiary? (w/Examples) + FAQs
- Can an Unincorporated Association Be a 501c3? + FAQs