Joint venture safeguards that assure the nonprofit exercises sufficient control over and oversight through majority voting or veto power.A requirement that decisions are documented by the board of directors (or other authority in the organization) with a determination that the venture substantially serves the mission based on the facts known (or that the organization agrees to move forward and assume the liability of UBIT with any associated legal risks).Requirements of a joint venture proposal and the decision-making process.A definition of joint venture to include any joint ownership or contractual arrangement with one or more taxable entities through which a joint business enterprise is undertaken. For that reason, an organizational policy on joint venture participation should be adopted before making decisions. Leadership’s full engagement demonstrates that the nonprofit is protecting its tax-exempt status and serving its mission. Understand legal and tax parametersīefore structuring specific joint venture transactions, it is important for leadership and directors to understand the legal and tax parameters of an ancillary joint venture. Regardless, it is critical for the venture to meet the above rules in order to be considered “ancillary” to a charity’s purpose.
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