Legal Question in Business Law in Ohio

LLC formation within private non-profit social service agency

I work for a private, non-profit agency and the CFO and administrative secretary have formed a LLC within the agency (meaning that they use phone system and fax machine as well as company time) to conduct this business' affairs. Since the private non-profit is funded by the county mental health board using federal and state funding as well as specific grant monies in addition to tax dollars (local) is it ethical, or legal to use time and agency supplies to conduct their business. In addition, the business donates a portion of their profit to the agency, but I believe these individuals do profit from the business as well. I was concerned regarding the legality of this endeavor.


Asked on 3/10/05, 3:10 pm

1 Answer from Attorneys

Re: LLC formation within private non-profit social service agency

They can not set up a for profit LLC that is unrelated to the business purpose of the non-profit without declaring it on the books of the non-profit as unrelated business income and having the non-profit be the member. They cannot personally profit from the business or own it. You should contact the Ohio Charitable Law Section of the Ohio Attorney General's Office to discuss this case with them.

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Answered on 3/19/05, 3:08 pm


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