Nonprofit Tax Tips

However, organizations must be careful. If these program investments are not exercised carefully, they could be subject to excise taxes, Lane says. That could result in a 20 percent tax on the foundation, a 5 percent tax on the manager who knew it was taxable, and can even be raised to 100 percent on the foundation and 50 percent on the manager in some instances. So it's urgent to ensure those investments fit social business purposes, not strictly for-profit goods and services. Everything must relate to the mission in a clear way and be documented to fit the laws.