Q: My 501c3 nonprofit organization is looking to sell ad space in it’s free newsletter. How should I proceed?
A: First, there are the nonprofit mail rates to consider before going forward. Any and all information you need from the United States Postal Service regarding the rules and regulations about advertising can be downloaded at: http://www.usps.com/tools/calculatepostage/nonprofitpostagerates.htm.
Also, offering outside vendors the option of posting an ad in your publication could serve useful for offsetting the costs of printing. However, please be mindful that unrelated business activity could accrue do to the advertising and subscription model preferred. Please consider the following article on unrelated business income: http://www.irs.gov/charities/article/0,,id=96104,00.html
As always, please seek the advice of your lawyer and accountant before proceeding.
Showing posts with label NPTaxExempt. Show all posts
Showing posts with label NPTaxExempt. Show all posts
Tuesday, October 09, 2007
Monday, September 24, 2007
Related vs. Unrelated Business Expenses
Q: What is the difference between business activities that are taxable and those that are not?
A: While pursuing a cause, a nonprofit organization may accrue some profit. This profit is considered tax-exempt, as it is a result of business related activities that prove beneficial to the given cause. Any profit that may come from business activity not related to the mission of the organization may be subject to taxation. There are exceptions in which unrelated activities will not be taxed, such as tasks performed by volunteers, the sale of donated merchandise, and/or the rental of mailing lists.
However flexible this rule may be, nonprofit organizations are often cautioned to lessen their unrelated business activities, as not to provoke inquiries from the IRS about tax-exempt status. It is also suggested that you seek legal advice before pursuing business activities as means to cultivate your mission or increase annual income.
For more information, please consider the following sources:
Publication 557: http://www.irs.gov/publications/p557/index.html
Exempt Organizations (UBI) Tax Statistics: http://www.irs.gov/taxstats/charitablestats/article/0,,id=97210,00.html
A: While pursuing a cause, a nonprofit organization may accrue some profit. This profit is considered tax-exempt, as it is a result of business related activities that prove beneficial to the given cause. Any profit that may come from business activity not related to the mission of the organization may be subject to taxation. There are exceptions in which unrelated activities will not be taxed, such as tasks performed by volunteers, the sale of donated merchandise, and/or the rental of mailing lists.
However flexible this rule may be, nonprofit organizations are often cautioned to lessen their unrelated business activities, as not to provoke inquiries from the IRS about tax-exempt status. It is also suggested that you seek legal advice before pursuing business activities as means to cultivate your mission or increase annual income.
For more information, please consider the following sources:
Publication 557: http://www.irs.gov/publications/p557/index.html
Exempt Organizations (UBI) Tax Statistics: http://www.irs.gov/taxstats/charitablestats/article/0,,id=97210,00.html
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