I am a trained reading specialist who works with dyslexic students. The parents pay me directly. Some parents contacted me to work with their child at his private school. The school says it must charge me rent in order to preserve its “nonprofit” status. I’ve never heard any other reading specialist mention that a school charge them rent. Is it true that they must charge me rent to preserve their nonprofit status?
Probably not. The school may be concerned about providing a private benefit to you, who are working “for-profit” and are not a charitable entity, if it provides space without charge. The logic would be that if you don’t pay fair market rent, they would be providing a special benefit to you and the IRS could question its federal charitable exempt status.
I think the better approach would be to say that they are giving you the space free as an accommodation to their student so that he can learn to read better. Their interest is in the education of their students, and you are helping even though the parents are paying you directly. Even if this were considered a private benefit, it should be considered an “incidental” private benefit and should not jeopardize their charitable exemption. A lot of 501(c)(3) nursing homes provide small amounts of free space to individuals who are providing services to their residents without jeopardizing their exempt status.
If they do charge you rent because you are “for-profit”, the local taxing authorities might look for some real estate tax because the property is not being used “exclusively” for charitable purposes.
If all of these arguments fail, they could employ you as an independent contractor to provide extra services to their student, for which the parents pay the school so that it can pay you. Seems like a lot of extra paperwork, however, to accomplish what they can accomplish directly.