For decades, nonprofits have been looking for ways to increase revenue in order to better achieve their nonprofit (or liberated) goal. One way to do this is to enter into a joint venture agreement with a for-profit company. The joint venture agreement contains details on the creation of a limited liability company (LLC) owned by a non-profit organisation and a for-profit entity. Revenue generated by the non-profit organization of the joint venture would be exempt from tax if the joint venture agreement complied with the guidelines of Revenue Ruling 98-15. Nonprofits can fully and completely integrate their programs, functions, and memberships by merging or consolidating. When two not-for-profit corporations merge, one entity legally becomes part of the surviving entity and dissolves. The surviving corporation takes possession of all assets and assumes all liabilities of the non-surviving entity. Unlike a merger, the consolidation of nonprofits involves the dissolution of each of the participating organizations and the creation of a brand new nonprofit corporation that will take over the programs, resources, and membership of the old entities. Although the net effect of a merger and consolidation is the same – a surviving company with all the assets and liabilities of the previous two groups – many organizations prefer consolidation over merger, as they tend to take advantage of the impression that no organization has an advantage over the other. There is a new company that houses the activities of both and is dissolved as part of the consolidation. The current IRS guidelines do not fully answer these questions.

In addition, the IRS continues to take a “no ruling” stance on these control issues for joint ventures. However, the lack of IRS guidelines should not prevent non-profit organisations from pursuing important joint venture opportunities. Joe Bowling, director of Englewood CDC, said that while both organizations have also collaborated with for-profit organizations, there is a certain degree of trust in collaborating with another nonprofit: “If we work with another nonprofit, it`s easier to actually coordinate missions and focus on the community.” Taylor agreed, “If you`re working with a for-profit joint venture, it`s probably 80 percent transactional and 20 percent relationship…