In 2008, the IRS conducted a survey of colleges and 
universities in a number of areas including executive compensation and unrelated business income. About 400 organizations received the survey. Based on the questionnaire responses, the IRS decided to open further investigations into 34 of the surveyed colleges and universities.
The results were shocking. A large percentage of those investigated were not complying with the IRS “Safe Harbor” (and by extension, California’s similar law) on executive compensation. One of the main problems was that the colleges and universities were selecting comparison institutions that were not actually comparable.
The investigated organizations were also found to be under-reporting unrelated business income. The result, as detailed in the final report, was an astonishing $90 million increase to reportable unrelated business taxable income, spread among 90% of the examined organizations.
Take note that the IRS decided that, based on the results of this survey, it will start looking into unrelated business income reporting on a larger scope. So if your organization is contemplating activities that may constitute unrelated business, speak with legal counsel first.