Earlier today, Emily and I presented Earned Income 101 for Nonprofits for Nonprofit Webinars. You'll find our PowerPoint presentation on the site. I've reproduced the introduction here:
Many nonprofits use earned income as a source of revenue generation. For example, it was estimated in 2008 that nearly 70% of the $1.4 trillion generated by nonprofits came from the sale of goods and services. However, despite its long-standing, common use in the nonprofit sector, the area of earned income for nonprofits is often wrought with misconceptions and misunderstandings which can lead to untapped sources of revenue or unknowingly jeopardizing the organization’s exempt status. Especially in light of current economic challenges facing the nonprofit sector, nonprofits should become familiar with the basic principles related to earned income to best help their organizations more effectively further their missions.
- IRS rules for determining whether business income is unrelated business taxable income
- Exceptions and limitations to unrelated business income
- Key considerations when choosing between a nonprofit and for-profit entity to house a business activity
- Other key considerations for carrying out your business activities.
Also check out Emily's popular posts: The Profitable Side of Nonprofits – Part I: Earned Income and Part II: Different Legal Structures
Here are some more resources:
IRS Publication 598 – Tax on Unrelated Business Income of Exempt Organizations
Social Velocity – Financing Not Fundraising: Evaluate Earned Income