What is one reason for an association to form subsidiaries?

Forming subsidiaries can serve several important purposes for an association, with one key reason being the protection of the association's exempt status. When an association creates a subsidiary, it can engage in different types of activities or business ventures that may not align perfectly with its nonprofit mission. By keeping these activities within a separate legal entity, the parent association can shield its tax-exempt status from potential jeopardy that could arise from unrelated business income generated by those ventures. This separation ensures that the primary mission and objectives of the association remain intact while allowing for growth and expansion into areas that could generate additional revenue or serve space for innovation.

The other options present scenarios that do not align with the strategic purposes of forming subsidiaries. For instance, reducing overall membership or limiting communication would negatively impact the association's outreach and engagement, which is contrary to the goals of most associations. Enhancing personal liability runs counter to one of the primary reasons for creating a subsidiary, as doing so typically aims to limit liability, not increase it.