1 ASSIGNMENT THREE Due last class session Grant Proposal or Event Plan Grant proposal must be real...

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ASSIGNMENT THREE

Due last class session Grant Proposal or Event Plan Grant proposal must be real

and complete Event Plan must be detailed

plan for a specific event

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NONPROFIT BUSINESS NONPROFIT BUSINESS ACTIVITYACTIVITY

Grantsmanship and FundraisingGrantsmanship and Fundraising

College of Public and Community ServiceCollege of Public and Community Service

University of Massachusetts at BostonUniversity of Massachusetts at Boston

©2007 William Holmes©2007 William Holmes

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NONPROFIT BUSINESS ISSUESNONPROFIT BUSINESS ISSUES

Tax RulesTax RulesBusiness OptionsBusiness OptionsBuilding on StrengthsBuilding on StrengthsBusiness PlanningBusiness PlanningLicense, Copyright, License, Copyright,

Cooperative VenturesCooperative Ventures

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NONPROFIT TAX RULESNONPROFIT TAX RULESMust relate to Must relate to

organizational purposesorganizational purposesRequires organized Requires organized

bookkeeping and bookkeeping and accountingaccounting

Doesn’t benefit individuals Doesn’t benefit individuals or non-charitable or non-charitable organizationsorganizations

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ACCEPTIBLE NONPROFIT ACCEPTIBLE NONPROFIT BUSINESSBUSINESS

One-time or occasional One-time or occasional eventsevents

Activity clearly within Activity clearly within organizational purposeorganizational purpose

Specifically exempted Specifically exempted activitiesactivities

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MISSION RELATED NONPROFIT MISSION RELATED NONPROFIT BUSINESSBUSINESS

Mission related educationMission related educationMission related trainingMission related trainingMission related therapy or Mission related therapy or

rehabilitationrehabilitationMission related experienceMission related experienceMission related travelMission related travel

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NONPROFIT BUSINESS NONPROFIT BUSINESS NOT ONGOINGNOT ONGOING

Once a yearOnce a year IrregularIrregularSpecial eventsSpecial eventsNot resembling regular Not resembling regular

businessbusiness

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NONPROFIT BUSINESS NONPROFIT BUSINESS EXEMPTIONS: 1EXEMPTIONS: 1

Volunteer basedVolunteer basedFor convenience of groupFor convenience of groupCompany sponsorships Company sponsorships

without clear advertisingwithout clear advertisingMerchandise sold is Merchandise sold is

donateddonated

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Permitted bingo gamesPermitted bingo games Rental of membership listRental of membership list Entertainment at fair or Entertainment at fair or

exposition for agriculture or exposition for agriculture or educationeducation

Dividends, interest, investment Dividends, interest, investment incomeincome

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Royalties from use of name, Royalties from use of name, trademark, or copyrightstrademark, or copyrights

Rents from real propertyRents from real propertyResearch grants or contractsResearch grants or contractsGains or losses from selling Gains or losses from selling

propertypropertyFee for mission related Fee for mission related

serviceservice

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NONPROFIT BUSINESS NONPROFIT BUSINESS TAXABLE INCOMETAXABLE INCOME

““Regular Trade or Business Substantially Regular Trade or Business Substantially Unrelated to Purpose”Unrelated to Purpose”

1.1. Trade or BusinessTrade or Business: selling goods or : selling goods or serviceservice

2.2. RegularRegular: frequency and continuity : frequency and continuity typical for that businesstypical for that business

3.3. Substantially UnrelatedSubstantially Unrelated: : not directly not directly contributingcontributing to organizational purpose to organizational purpose

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EXAMPLE NONPROFIT EXAMPLE NONPROFIT TAXABLE INCOMETAXABLE INCOME

Selling mailing list to for-profit businessSelling mailing list to for-profit business Using facility charging access to Using facility charging access to

general publicgeneral public Selling crafts made by general publicSelling crafts made by general public Offering unrelated service to the publicOffering unrelated service to the public Travel tours without education related Travel tours without education related

to purposeto purpose Charging for use of name on product Charging for use of name on product

endorsementendorsement

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NONPROFIT INCOME:NONPROFIT INCOME:RISKS TO CHARITY STATUSRISKS TO CHARITY STATUS

Business must not dominate charitable Business must not dominate charitable activityactivity

Taxable income must not dominate Taxable income must not dominate nontaxable incomenontaxable income

Business must not be substantially Business must not be substantially increasing when charitable activity is increasing when charitable activity is decreasingdecreasing

Consider separating successful Consider separating successful businessbusiness

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NONPROFIT BUSINESS NONPROFIT BUSINESS PRINCIPLES: 1PRINCIPLES: 1

Client run business is good for Client run business is good for training and poor for profitstraining and poor for profits

Sales of goods has opportunity Sales of goods has opportunity costs and needs experienced costs and needs experienced managersmanagers

Sales of services need skilled Sales of services need skilled service providersservice providers

Key on unmet needsKey on unmet needs

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NONPROFIT BUSINESS NONPROFIT BUSINESS PRINCIPLES: 2PRINCIPLES: 2

Develop business planDevelop business planStart small, minimize risksStart small, minimize risksGet advice from other Get advice from other

nonprofitsnonprofitsBeware demands on programBeware demands on program

1 ASSIGNMENT THREE Due last class session Grant Proposal or Event Plan Grant proposal must be real...

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