CATEGORY

UBIT

Fundraising Regulation

Can Non-Profits Earn Business Revenue?

With the market volatility of the last six months, funding sources and non-profits alike may be uneasy given memories of the 2008 recession. Although predicting future macro-economic forces may be impossible, it is always a good idea for 501(c)(3) non-profit corporations to seek to diversify revenue streams to prepare for shifts in funding.

Read More »
Taxable Subsidiary
Nonprofit Tax

Is it Time to Form a For-profit Subsidiary?

Tax-exempt Organizations engaging in social enterprise or other active business pursuits often worry that a growing stream of unrelated business income could threaten their tax-exempt status. This concern is related to the prohibition against tax-exempt organizations engaging in more than an insubstantial amount of activity unrelated to their tax-exempt purpose. Unfortunately the term insubstantial is undefined. Based on court cases, it appears that gross unrelated business income receipts of 5 percent or less is always safe while over 20% is probably too much.

When unrelated business endeavors take off, the success of the business can threaten a 501(c)(3) organization’s tax-exempt status. To protect their tax-exempt status, many tax-exempt organizations with successful unrelated business ventures move their unrelated business activities into a taxable for-profit subsidiary.

Read More »
Scroll to Top
FREE DOWNLOAD

How to Start a Non-Profit Organization

Download our free guide to learn about the many elements needed to run a successful nonprofit organization, as well as how to avoid common pitfalls and mistakes.