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employment taxes? Will any insurance requirements be imposed on either
organization (liability, medical, travel, life, etc.)? Will either organization be required
to secure additional insurance? Will one party indemnify the other?

i. Duration

How long will the partnership last? Under what circumstances can the
partnership be terminated before the agreed-upon termination date (for example,
loss of funding or breach of the agreement)? What are the consequences? Will
either organization owe money to the other? Will the organization agree in advance
to an alternative dispute resolution process, such as mediation or arbitration, in the
case of litigation?

j. Recognition/Visibility

What type of recognition will each organization receive? Will the organization
acknowledge each other in written materials or on their respective websites? Will
press releases be sent out? What other type of public recognition will be required?

k. Shared Services, Facilities, and Personnel

Which organization’s employees will be responsible for overseeing the
project? How will they be paid and who will supervise them? Will either party have
access to or use of the other’s facilities or equipment? Any agreement to share
services or facilities between a tax-exempt organization and a private partner must
be at arm’s-length and must justify the reason for the sharing arrangement, for
example economies of scale.

As should be apparent from the foregoing list, there are many issues to be
resolved in forming a partnership. Although the foregoing list is a good point of
departure for discussing a potential collaboration, consider consulting with an
attorney and/or accountant before embarking on any such enterprise to ensure

that the organization’s legal and financial interests are protected in writing.

Skilled advisors will also be able to tell you whether it makes sense to create
a separate entity (usually a subsidiary of your organization) to enter into the
agreement with a partner. The rules governing subsidiary organizations are
complex, and a number of different types of subsidiary organizations can be
created (for example, a corporation, partnership or limited liability company)
depending on the specific circumstances of the organization and what it is hoping
to accomplish. If properly formed and maintained, a subsidiary can be used to

WASHINGTON NONPROFIT HANDBOOK -204- 2018