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How involved can a charity be in an EB-5 direct investment?

We plan to create a new limited partnership in a TEA for an EB-5 direct investment. For the property, a registered charity wants to lease out part of their facilities to us on a time-share basis for a minimum 5 year lease. They would have 50% of the lease in advance and the rest on an annual basis, collected as a donation. The charity is also giving us an option to use their brand name for higher visibility for a donation. Is the donation paid towards capital expenditure in line with EB-5 direct investment? Is using a charity brand name in agreement with EB-5 rules?

Answers

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    J Bruce Weinman

    Immigration Attorney
    Answered on

    I need more information about what the business is and what you are doing. But, based on the information provided, there is nothing that would automatically render investors ineligible for EB-5.

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    Ed Beshara

    Immigration Attorney
    Answered on

    The investors will have to invest in a New Commercial Enterprise and the Job Creating Entity, which must be a for-profit entity.

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    As long as the NCE is a for-profit entity and otherwise meets all of the EB-5 requirements, I do not think that renting facilities from a charity will impact the EB-5 eligibility of your project.

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    John J Downey

    Immigration Attorney
    Answered on

    This may be more of an accounting question. The EB-5 entity is paying a charity for the use of the premises. It is a rental payment as far as you are concerned. The charity can list it as a donation; this should not affect the EB-5 project.

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    Robert Lee

    Immigration Attorney
    Answered on

    I would probably see if it is in the charity's rules for them to be able to make such an agreement and maintain their charity status. The rules state that a commercial enterprise means any for-profit activity formed for the ongoing conduct of lawful business including, but not limited to: a sole proprietorship, partnership (whether limited or general), holding company, joint venture, corporation, business trust or other entity, which may be publicly or privately owned. So it depends on what your company is doing. Personally I would not recommend it because it is too risky creating a for profit company with a non profit's name.

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    Oliver Huiyue Qiu

    Immigration Attorney
    Answered on

    Charity is not compatible with EB-5. The investment, by regulations, has to go into private and "for-profit'' business, which is in the nature at-risk. A non-profit organization is not an at-risk business, which is excluded from EB-5 program.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    The "new commercial enterprise" must be a for-profit entity, but the "job creating entity" that would receive a loan or investment from the NCE (allowing the NCE to take credit for job creation) could possibly be a non-profit. I would need to know more about your proposed arrangement to be sure.

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