Joint Venture Policy (Abbreviated Version)


Generally, a joint venture is considered an undertaking for business or tax-exempt purposes by two or more organizations. These arrangements usually have: (1) an express or implied agreement; (2) a common purpose that the group intends to carry out; (3) shared profits or losses; (4) each member’s equal voice in controlling the project. [1]

This policy is designed to include arrangements that fit in this definition as well as those that are similar in nature or effect as detailed in the application section below.

This policy applies to all joint ventures or similar arrangements (or a “venture or arrangement”). For this policy, the terms mean any joint ownership or contractual arrangement, either express or implied, through which there is an agreement to jointly undertake a specific business enterprise, investment, or exempt-purpose activity without regard to: (1) whether the organization controls the venture or arrangement, (2) the legal structure of the venture or arrangement, (3) whether the venture or arrangement is taxed or tax-exempt as a partnership or as an association or corporation for federal income tax purposes, or (4) whether the activity produces a profit or loss.

The following transactions and relationships are specifically excluded from this Joint Venture Policy. Items excluded from the application of this policy may be covered by other policies (such as investment or contribution policies).

  1. Investments in publicly traded securities, mutual funds, insurance company annuities or life insurance products, or bank savings accounts.

  2. Charitable Remainder Trusts

  3. Charitable Gift Annuities

  4. Contributions of business and investment interests (corporate stock, LLC interests, life insurance, etc.), where this corporation is protected from liability, and has no required additional investments or carrying costs.

The exclusion of Charitable Remainder Trusts and Charitable Gift Annuities applies only to the agreement with the donor. Investments used by the charitable remainder trust or supporting the charitable gift annuity will be subject to this policy, unless they meet another exception.


All joint ventures or arrangements must be approved by the Board of Directors.

Minimum Requirements for All Ventures

All ventures and arrangements must meet all the following requirements. The Board may add requirements for specific ventures at its discretion.

  1. The purpose for involvement in the venture must be described in detail, including all associated use of ministry resources whether directly part of the venture, or not, and the projected ministry and/or financial benefits to the organization. For joint ventures with anticipated ministry benefits, the description shall include describing the relationship of the joint venture activities to existing ministry activities and the organization’s goals.

  2. A written agreement with other parties associated in the venture shall include the following elements:

    1. The organization will exercise control over the venture or arrangement, or the agreement will provide sufficient control to ensure that it furthers the tax-exempt purpose of the organization.

    2. The venture or arrangement will give priority to the tax-exempt purposes of the arrangement over maximizing profits for the other participant(s).

    3. The venture or arrangement shall not engage in activities that would jeopardize the organization’s exemption from taxation (such as political intervention or substantial lobbying).

    4. All contracts entered into with the organization shall be on terms that are arm’s length or more favorable to the organization.

    5. Any arrangements with or payments to directors, officers or employees of the organization must be reported to and specifically approved for each person by the Board of Directors.

    6. All accounting practices, budget requirements, and fiscal responsibilities are to be in accordance with corporate requirements and guidelines as directed by the licensed financial.

    7. All terms and agreements relating to the venture are in a written agreement signed by all the parties to the venture or arrangement.

Click here for a sample long version of this policy to modify.


[1]  Bryan A. Garner, Editor in Chief, Black’s Law Dictionary, 8th Ed., West, a Thomson business, St. Paul, MN, 2004, p. 856.

This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.