Posts Tagged ‘UBI’

At the end of most newsletters, we put out the call for “topic requests”.  We wanted to get to some reader questions before the year ended. We will try to answer questions like these, that don’t require a whole article, from time to time. If you have article topics that you would like us to cover, email them to us at mail@foundationgroup.com or simply reply to the email newsletter when you receive it.  We cannot guarantee your question will be chosen, but we’ll try.  On to the questions…

Q) Do all donations need to be spent by year’s end?

A) The quick answer is, no. “Nonprofit” does not mean that at the end of the year there should be no money left in the account.  A 501(c)(3) organization can have money left at the end of the year. It would probably be a good idea if it can.  Money left over can go toward adding programs, improving existing programs, make up for less funding next year, etc.  Never forget that you’re still running a business (of sorts)…you gotta make more than you spend!

Read the rest of this entry »

There are few topics that generate more confusion to nonprofit managers than unrelated business income (UBI).  It is also one the areas than can cause the most problems for your organization.  It can cost you money…even your tax exempt status if not properly handled.  In this issue of our newsletter, we will shed some needed light on the subject.

The technical definition of UBI is: Income from a trade or business that is regularly carried on by an exempt organization and that is not substantially related to the performance by the organization of its exempt purpose or function, except that the organization uses the profits derived from this activity. Clear?  Not really.  A better way to say it is:  money generated from any on-going activity of your organization when the activity itself does not directly further the organization’s exempt purpose.  Examples are helpful:

Read the rest of this entry »