Can a club own and manage real estate?
February 4, 2022 | 40,00 EUR | answered by Roberta Lahn
Dear lawyer,
I am writing to you with a question regarding association law. Our organization, the non-profit association "Children's Aid", is planning to purchase a property to expand our activities in the field of child and youth welfare. We have already collected some donations and would now like to determine if it is legally possible for the association to own and manage real estate.
The current situation is as follows: Our association was founded five years ago and is recognized as a non-profit organization. We work for disadvantaged children and adolescents in the region and carry out various projects and events. Since our space is limited in our current premises, we would like to acquire a property to expand our activities.
My concerns lie in the fact that I am not sure if a non-profit association like ours is allowed to own and manage real estate. I am also worried about the tax and legal consequences that could be associated with acquiring a property. Additionally, the question of financing and the long-term management of the property is on my mind.
Therefore, my specific question to you is: Is a non-profit association like "Children's Aid" allowed to own and manage real estate? Are there specific requirements or conditions that we need to consider? What tax and legal aspects need to be taken into account? And what options are there to ensure the long-term financing and management of the property?
Thank you in advance for your support and advice.
Best regards,
Martina Breitwieser
Dear Mrs. Breitwieser,
Thank you for your inquiry regarding nonprofit law and the planned purchase of a property for the nonprofit organization "Kinderhilfe e.V." It is understandable that you are considering the legal and tax aspects, as well as the long-term financing and management of the property. I am happy to provide you with detailed information regarding your questions.
In general, a nonprofit organization is allowed to own and manage properties. Owning properties can help support the organization's goals and ensure long-term stability. However, there are certain requirements and regulations that must be followed. Firstly, the acquisition of the property must align with the organization's statutory purposes. This means that the property must be used for children and youth welfare in order to maintain the organization's nonprofit status.
Furthermore, the tax aspects must be considered in the financing and management of the property. A nonprofit organization is exempt from corporate tax, but income from renting or leasing may be taxable. It is important for the organization to proceed carefully and seek advice from a tax advisor to avoid tax risks.
To ensure the long-term financing and management of the property, it is recommended to create a financial plan and set aside funds for maintenance, renovation, and potential repairs. Additionally, reserves for potential vacancies or rental losses may be useful to avoid financial difficulties.
Overall, the purchase of a property for the nonprofit organization "Kinderhilfe e.V." is possible if the aforementioned requirements and regulations are followed. It is advisable to seek support from an experienced attorney specializing in nonprofit law to avoid legal pitfalls and successfully carry out the purchase of the property.
I hope that this information has been helpful, and I am available to answer any further questions you may have.
Best regards,
Roberta Lahn, Attorney specializing in nonprofit law.
