Christian Leadership Alliance

The Energy Crisis

The Benefits and Costs of Forming a Separate Corporation

A tax exempt nonprofit organization, such as a Christian ministry organization, may benefit from the creation of a separate corporation to carry on certain functions in support of the organization's primary purposes and activities. However, creating and maintaining a separate corporation may result in additional costs and administrative burdens on the parent corporation. Further, the potential benefits may be attenuated if the separate corporation is not structured so as to accommodate the unique circumstances and objectives of the parent corporation. Therefore, a nonprofit organization interested in obtaining the benefits of forming a separate corporation must carefully consider the costs and the extent to which the benefits apply to its particular situation.

This memorandum discusses the benefits and costs of forming and maintaining such a separate corporation. It also describes the alternative legal arrangements under which a separate corporation may be formed, and the steps involved ...

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