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Nonprofit Law/501c3 & For-Profit Relationship w/ Same Mgmt


I'm an owner of the XYZ Company which is a for-profit LLC dedicated to youth enrichment services; fitness, nutrition, educational enrichment, sports leagues, sports coaching etc. I'm also the president of ABC Charity, Inc. a 501c3 public charity that promotes the heath and wellness of youth in the same area as XYZ Company.  Can we use funds from ABC Charity for XYZ's enrichment programs that would support the underprivileged and at-risk youth in our area?  Thanks Harvey!

See starting on pages 11 "Private Facil ity Owners" which discusses prohibited private benefit and excessive control of the booster organization by such private facility owners. Even though the ABC Charity, Inc. may not be a booster organization, the IRS would tend to scrutinize grants from the 501(c)(3) organization to the for-profit organization as there is a high possibility that the 501(c)(3) organization did not look at what other companies in the location could offer but simply decided to fund the for-profit that is related to its corporate president.

Otherwise, a 501(c)(3) organization may certainly fund a project of an unrelated for-profit entity through a contract for services to be rendered to charitable beneficiaries, like youth.

Harvey Mechanic
Attorney at Law

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.

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Harvey Mechanic


DO NOT GIVE ME INFORMATION THAT YOU WANT KEPT CONFIDENTIAL. I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "" without the quotes and then add your search terms before hitting enter.


I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.


B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.

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