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Lee Phillips discusses the use of LLCs as nonprofit organizations, clarifying that an LLC cannot operate as a nonprofit on its own. An LLC designated as a nonprofit must be exclusively owned by another entity that is also a nonprofit. In contrast, a nonprofit corporation can be owned by individuals who are not nonprofits. To qualify as a nonprofit, the LLC must adhere to IRS guidelines and fulfill specific requirements, including filing organizational papers that detail permissible activities. It’s essential for those considering this structure to understand these restrictions and the necessary qualifications for the LLC to operate as a nonprofit.