The IRS and some states require nonprofits to disclose certain documents to the public upon request. Additionally, the IRS and some states even make these documents available to the public. Donors want to be able to ensure that the nonprofits they donate to are spending their contributions wisely. Maintaining transparency – which nonprofits accomplish in …
It is a best practice for nonprofits to have a conflict of interest policy to guide them on how to approach conflict of interest transactions. Such a policy will help ensure that, when actual or potential conflicts of interest arise in connection with a proposed transaction, the nonprofit has a process in place under which the relevant individual(s) will advise the governing body about all the pertinent facts concerning …
Any organization that has received an IRS determination letter recognizing it as a 501(c)(3) organization may offer donors a tax deduction for their donations. However, for your donors to receive a tax deduction, your nonprofit must properly acknowledge charitable contributions it receives by following the requirements described below. What is a Donation Acknowledgment? As summarized …
Review of Unrelated Business Taxable Income While 501(c)(3) organizations are generally recognized as tax-exempt, they may have to pay tax on income derived from certain revenue-generating activities (as opposed to income from donations) known as unrelated business taxable income (UBTI). Income may be considered UBTI if it (1) is from a trade or business, (2) …
What is unrelated business taxable income (UBTI)? Although tax-exempt organizations (referred to herein as a “nonprofit”) are generally exempt from federal income tax, they may have to pay income tax on net income derived from business activity that is unrelated to their tax-exempt purpose, called “unrelated business taxable income” (UBTI). This type of tax is …
What is Political Campaign Intervention? Participating in, or intervening in, any political campaign on behalf of, or in opposition to, a candidate for elective public office is called “political campaign intervention.” 501(c)(3) tax-exempt organizations are strictly prohibited from engaging in any political campaign intervention, direct or indirect, including supporting or endorsing a candidate for public …
