Research Handbooks in Corporate Law and Governance series
Edited by Robert W. Hillman and Mark J. Loewenstein
Chapter 14: Nonprofit and charitable uses of LLCs
The overwhelming first choice in new, for-profit business entity formations is the limited liability company (“LLC”). Less well known, however, is the increasing use of LLCs for nonprofit and charitable endeavors. Accordingly, this chapter explores in four sections the emerging use of LLCs for nonprofit and charitable purposes, including the use of LLCs in hybrid for-profit/nonprofit arrangements. Section 2 provides necessary background information on the nonprofit and charitable sector. Section 3 surveys the relatively common use of LLCs as nonprofit subsidiaries or affiliates. Section 4 examines how LLCs are used to facilitate certain charitable or quasi-charitable activities, including program-related investments and social enterprise. Section 5 concludes with some very recent, innovative uses of LLCs by donors to charities.
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