To Non-Profit or Not

September 18, 2009 7:27 AM

I want create a legal entity for my consulting work and research. Should I create a non-profit or a company?

You are not my lawyer.
I will talk to a lawyer.
This is not a legal question.

I am an academic researcher. My expertise is in (let's pretend) environmental policy. I would like to have one foot in academic research and one foot in for-profit consulting work. For consulting work, a friend suggested I create company for tax and liability purposes.

However, I would also like to apply for research grants, which often require that the grant recipient be a non-profit organization.

If I want to conduct both consulting work and apply for research grants, should I create a non-profit or a company?

Thanks in advance!

posted by Spurious to work & money (3 comments total)

Sounds like two different activities. Would it be too much to create two entities?
posted by exogenous at 7:47 AM on September 18

You can't simply "create" a not-for-profit organization. There are stringent requirements that allow entities to qualify for non-profit tax status. I am not a lawyer, but I've worked for non-profits my entire career, and I find it difficult to believe that you would qualify, If your goal is actually to reduce your personal tax liability, trying to get yourself designated as a non-profit would be a tax shelter, and my guess is that you could get in some serious trouble for it. Consult your attorney, but my guess is that you need a sole proprietorship.

As for your grants, if your work is any good, I'd suggest contacting existing non-profits in your field and asking whether they would consider making you an adjunct or fellow. They wouldn't have to pay you, but they'd get the benefit of any accolades you get, and you'd be eligible for a wider range of grants. Big non-profits do this all the time.
posted by decathecting at 8:58 AM on September 18

As for your grants, if your work is any good, I'd suggest contacting existing non-profits in your field and asking whether they would consider making you an adjunct or fellow. They wouldn't have to pay you, but they'd get the benefit of any accolades you get, and you'd be eligible for a wider range of grants. Big non-profits do this all the time.

Great advice. Thanks!
posted by Spurious at 9:04 AM on September 18