There are solidly legal and solidly illegal ways to do this, and a range of options in between. My reading of what they are doing is that it is pretty far towar

There are solidly legal and solidly illegal ways to do this, and a range of options in between. My reading of what they are doing is that it is pretty far toward the legal end of this spectrum, and the key question will be whether whether the non-profit is appropriately compensated for its stake in the for-profit. Explaining reduces the chance that they're challenged by the IRS or attorney general, since that is a political process.