For-profit ventures help nonprofits shore up the funding they need to maintain and expand their programs

By Abny Santicola

“If a nonprofit conducts a business that does not directly contribute to the accomplishment of its tax-exempt mission, it has to pay a tax on the net income from that business at normal corporate tax rates,” he says. “But if the activity contributes directly to the accomplishment of the organization’s mission, it is not subject to the tax. Moreover, passive income, such as royalties or dividends, is not subject to UBIT. And other activities, such as the sale of donated merchandise, activities carried on solely by volunteers or activities carried on for the convenience of members, are also exempt.”