In the past, I have explored the differences between organizing a faith venture business as a non-profit or a for-profit entity. Both of these organizational structures have definite advantages and disadvantages.
For organizations exploring a non-profit business venture, I am frequently questioned over the issue of unrelated business income tax (UBIT). The UBIT tax applies to income earned in activities not “substantially related” to the charity’s exempt purpose. Thrift store operations are automatically exempt. But other business activities need to be designed to actively incorporate the charity’s mission or else to allow room in the budget for UBIT tax expenses.
As is often the case with IRS organizational issues, the definition of “substantially related” has some gray areas that need to be explored. These difficulties arise when organizations see the business as primarily an income generating enterprise to support other charitable activities.
But, overall, the UBIT tax is not to be feared…especially for organizations that are incorporating their mission into the business activity. Just this past week, the Internal Revenue Service has issued an updated Publication 598 on the issue.
Exploring the intersection of faith & entrepreneurship for disadvantaged communities.
Subscribe to:
Post Comments (Atom)
Teen Challenge's BAM Thrift Store Profiled on Fox 13 Memphis
Check out Teen Challenge's BAM Thrift Store in Memphis, Tennessee, profiled recently on the local Fox station. Work is such an importa...

-
I was excited to see Catherine Rohr's essay "Why You Should Hire Ex-Cons" in Inc today. She makes a wonderful case that I hope...
-
Sometimes opportunity finds you. In 2003, Cherry Hills Community Church called Baby Bud's Director Dianne Sager with a question. The re...
-
Last week, I answered my phone and heard the voice of one of our recent graduates at Bud's Warehouse . I could immediately tell somethin...

No comments:
Post a Comment