Just Ask Avisen - Episode Two: Rules for Setting Up a Non-Profit

Can you start a nonprofit to help families afford services offered by your for-profit business? For business owners who provide tutoring, music lessons, summer camps, or other services, creating a nonprofit to offer financial assistance to families may seem like a natural solution. But when charitable donations ultimately benefit the founder's for-profit business, the arrangement can raise significant legal concerns. In this installment of Avisen Legal's educational video series on Minnesota nonprofit law, attorney Kim Lowe explains the potential risks of these arrangements, including IRS restrictions on private inurement and private benefit, conflicts of interest under Minnesota law, and the importance of maintaining independence between charitable organizations and for-profit businesses. Kim also explores alternative approaches that may allow businesses to help families access services without creating unnecessary legal or regulatory risks. Topics covered: -Starting a nonprofit to fund services provided by a for-profit business -IRS private inurement and private benefit restrictions -Excess benefit transactions and self-dealing -Conflicts of interest under Minnesota Statutes Chapter 317A -Independent nonprofit boards and charitable scholarship programs -Alternative approaches to providing need-based financial assistance Learn more about Minnesota nonprofit law and governance in Avisen Legal's library of helpful legal resources. Please note: This video features an AI-generated avatar of Avisen Legal attorney Kim Lowe. This video is provided for general informational purposes only and does not constitute legal advice or establish an attorney-client relationship.