It is often assumed that all nonprofit organizations are completely tax exempt, but do nonprofit organizations pay taxes? While most nonprofits do have exempt status, they can still be subject to tax if they have unrelated business taxable income (UBTI). UBTI is subject to unrelated business income tax (UBIT). 

Unlike public companies, nonprofit boards aren’t required to have audit committees. So it’s not surprising that 42% of nonprofits don’t, according to Stanford Graduate School of Business’s 2015 Survey on Board of Directors of Nonprofit Organizations.

The Tax Exempt and Governmental Entities (TE/GE) division of the IRS consists of three subdivisions, as follows:

1. Exempt Organizations subdivision (EO)
2. Employee Plans subdivision (EP)
3. Federal State and Local Governments subdivision (FSLG)

The 2016 tax year brings specific compliance issues into focus for each of these three subdivisions.

Form 990 disclosure pumps up the urgency of state registration

For years Anytown, USA, Charity has asked for donations from out-of-state residents. This started on a small scale — a handful of the charity’s donors retired in other states or lived there part of the year.

Now the charity has begun to reach out to hundreds of potential contributors in multiple states. The Internet makes it easy and inexpensive for the not-for-profit to solicit funds outside of its backyard. But along with this expansion comes the need for registration in additional states.

For many nonprofits, it’s a never-ending challenge: finding board members who are qualified, passionate about the organization’s mission and committed to good governance. This article provides tips for a more successful search — including targeting individuals with specific skills, not overlooking volunteers and treating the board position as an actual job.

Cyber thieves don’t physically grab your keys or force an entry into your home, but the damage they do to your organization can be just as consequential. If your nonprofit becomes the victim of cybercrime, it could suffer a blow to its reputation that’s impossible to overcome.

So it’s important to assess your risks of data breaches carefully, and implement effective security policies and procedures. This will put you in a better position to protect valuable financial and personal data about donors and other constituents.

Every nonprofit dreams of receiving a large endowment that will keep it financially worry-free in the future and allow it to fulfill its mission with ease. But, in the real world, endowments also carry serious responsibilities, created by the Uniform Prudent Management of Institutional Funds Act (UPMIFA). There are many endowment fund rules to follow. When managing endowments, nonprofit leaders must keep the following realities in mind.

The first successful U.S. micro-donation effort may have been in 1891 when a Salvation Army captain put a kettle out on a San Francisco street and collected donations to fund a Christmas dinner for the poor. Micro-donations have morphed in many ways since then, involving small-sum donations made via checkbooks, credit cards and, in more recent years, website links, text messages and other “new technology” tools.

How successful your charity will be in following the micro-donation tradition depends on many factors, including the economy, marketing ingenuity, ease of making donations and security controls. Here are four suggestions for making those small potatoes add up.

Many nonprofits depend on the funds raised at an annual gala, conference or other special event to keep their organization in the black. But successful events require a careful balancing act. You need to keep a tight rein on expenses, yet attract and entertain as many generous supporters as possible. Here are some ideas for maximizing revenues.

Nonprofits have pursued corporate sponsorships for years, with good reason. Effectively executed, sponsorships can benefit both sponsor and organization. But if your nonprofit isn’t careful, a sponsorship can be deemed paid advertising and your organization could end up liable for unrelated business income tax (UBIT). Although the Internal Revenue Code includes an exception from UBIT for certain sponsorship arrangements, navigating the rules can prove tricky.