Earned Income Issues and Guidance for California Nonprofits (Audio Only)

Many people are surprised to learn that over 70% of the revenues from reporting public charities comes from the sale of goods and services. And charities are increasingly engaging in earned income (and social enterprise) ventures as they face the simultaneous challenges of uncertainty in public fundraising and the tax benefits associated with charitable giving, undependable philanthropic funding, and increased competition for limited resources. But earned income is an area wrought with misconceptions and misunderstandings.

The rules governing unrelated business taxable income (UBTI) are complex. As a result, many non-profits simply fail to properly report and pay taxes on their UBTI or preclude themselves from starting an earned income venture. As the differences in the activities of nonprofit and for-profit organizations continue to blur with the increasing commercialization of charities and the growth of socially-purposed taxable entities (like the benefit corporation), the associated tax issues will only get more complicated. Subsidiaries, joint ventures, and commercial co-ventures may be useful options for some nonprofits if entered into with sufficient knowledge and consideration.

This audio-only course, taught by Gene Takagi, the managing attorney of NEO Law Group, a firm specializing in nonprofit law, reviews the legal issues that should be considered when reviewing a non-profit's earned income venture and offers practical guidance on best practices for both in-house and outside counsel.

Learning Objectives:

1. Understand how to assess an existing or planned profit-making venture for corporate and tax law compliance
2. Distinguish between related and unrelated businesses
3. Learn when unrelated business income tax (UBIT) gets triggered and what deductions are appropriate to take to minimize the organization's tax burden
4. Assess when a subsidiary or affiliated entity may be of use and what legal forms (including hybrid forms) such an entity may take