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Can charity aid for-profit business?

Your Legal Questions Answered

Can charity aid for-profit business?

Can nonprofits give their money directly to for-profit businesses to aid or assist them in any way?

Generally the answer to that question is “no” because it would not be within the charitable purpose of the organization and could result in impermissible benefit to the business.  There are some notable exceptions, however.  An economic development corporation might make grants or below market interest rate loans to a business, particularly in a low-income area, in pursuit of its charitable mission of economic development.  Other charities make grants to utilities to pay for use by low-income people who might otherwise be without heat or electricity.  Those grants are designed to aid the people, even though they incidentally benefit the utilities.  As usual in this field, there are few absolute answers.

Tuesday, June 2, 2009

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