Complete Story


Association Subsidiaries and Affiliates:

Understand the options

Section 501(c)(6) associations seeking potential new sources of revenue could consider adding a 501(c)(3) organization, taxable subsidiary, or limited liability company (LLC) to the corporate mix. Although adding a new entity will involve additional administrative time and expense—additional tax filings, state compliance, bank and investment accounts, multiple board meetings, sharing agreements, time sheets, and separate website addresses, for example—it may be worth the effort if the new entity would invite government or private grants for research or other programs or if there is a potential revenue-generating activity.

Each type of entity involves its own set of advantages and disadvantages for leaders to consider carefully before making such a move.

Section 501(c)(3) Considerations

Section 501(c)(3) organizations can receive tax-deductible contributions and are eligible for a wide array of government and private grants. Also, state sales tax exemptions on purchases and lower postal rates benefit these types of organizations. But the 501(c)(3) tax status comes with some significant restrictions: These organizations cannot engage in substantial lobbying and are prohibited from engaging in political activity.

Please select this link to read the complete article from ASAE's Center for Association Leadership.

Printer-Friendly Version