Fundraising Ideas for the Fund Raiser

Home
Yellow Pages
Newsletter
Contact Information
Free Booklets
Fundraising Classifieds
Subscribe - Free
Fundraising ideas for a fundraiser Great new fundraising ideas for your next fundraiser
New Fundraisers FUNDRAISER OF THE MONTH "Looking for more fundraising choices?"

SUBSCRIBE FREE
Make sure you get all this good fundraising info every time we publish a new article!

Your Name:

Your E-mail Address:

We promise never to sell, rent, or give your email address to anyone else. PERIOD!

Bookmark This Fundraiser Site
Share this Fundraising Site
Fundraising Feed Subscribe in a reader


Article Archive

Fundraising Auctions

Fundraising Calendar

Fundraising Events

Grants

Fundraising Ideas

Nonprofit Leadership

Fundraising Letters

Nonprofit Newsletters

Planned Giving

Publicity

Fundraising Raffles

Fundraising Strategies

Volunteers

General




Fundraising Products, Services and Ideas

Fundraising Newsletter

Fundraising secrets, tips & hints

FAQ About Nonprofit Newsletter Publishing

by the Publishing Business Group


Question: Can we loose our nonprofit status if we have too much advertising sales success?

Generally speaking, your organization’s tax exemption covers any activity that is substantially related to the charitable, educational or other purpose that forms the basis upon which the IRS granted the exemption, even if the activity is a business activity. However, if the organization regularly carries on a business that’s not substantially related to its exempt purpose, the organization is subject to income tax on any profits from that activity.

As a default, IRS considers that advertising sales is unrelated business income and imposes a tax on your profits from ad sales. But in many cases, you can argue that advertising sales is actually related to your mission. Running car ads in your member newsletter is probably not related business income, but running ads from language schools in your career magazine for immigrants certainly is related.

You can lose your tax-exempt status by having too much unrelated business income (UBI), but unfortunately, the IRS has not issued any specific guidelines as to how much is too much. We know publishers who deliberately limit their advertising income to 25% of total annual receipts, but we also know of cases where more than 50% of income was derived from UBI and exempt status was upheld. It might be impossible to defend your tax status if you earned nearly 100% of your operating funds through unrelated business activities.

All unrelated business profits are taxable, including profits from advertising sales. The UBI tax law distinguishes between advertising, which involves the promotion of goods and services (UBIT applies), and donor recognition, which involves a mere acknowledgement of a donor's support (UBIT does not apply). That's why an ad in a conference directory generally doesn't give rise to UBIT liability. There are also special rules concerning the type of expenses that can be deducted against the advertising sales revenue for purposes of figuring the UBIT liability

Failure to identify and pay UBIT can result in your nonprofit being assessed back taxes, interest and penalties. Organizations operating an unrelated business must file form 990-T, Exempt Organization Business Income Tax Return, whether a tax is due or not.

Question: What kind of ads are we prohibited from selling and why?

You advertising sales program is impacted by three factors that might limit what ads you can sell: your organization’s policies, your US Postal Service permit status, and the total income you report to the IRS. All three are covered in our new book due for publication in Spring 2007. Here’s a quick summary.

Organizational prohibitions – most nonprofit organizations reject ‘sin’ ads such as tobacco, alcohol and pornography, and your organization may have other ethical or mission-driven conflicts with certain advertisers. Ask your organization’s leadership to draw up a list of products that would compliment your mission and sell ads to those companies.

Postal restrictions – the post office charges higher prices for advertising material than for editorial content. No matter what kind of mailing permit you obtain, you will pay more postage if you carry ads. But that extra postage is generally easy to recover from ad income. In addition, if you mail by one specific permit category – nonprofit standard mail – then you are prohibited from running any ads for financial services, travel, or insurance. All of the postal regulations are available in the Domestic Mail Manual on their website. You can also get help with this question from your printer or circulation consultant.

IRS restrictions – ALL advertising income is classified ad ‘unrelated business income’ by the IRS, but it does not directly prohibit any kinds of ads from nonprofit publications or websites. You will pay taxes on your profits from advertising sales (meaning any ad dollars that exceed your publishing costs). The IRS provides explicit instructions for calculating advertising sales profits at their website: General Rules for UBIT and for more information on IRS rules about UBIT, read IRS Publication 598, Tax on Unrelated Income of Exempt Organizations, available online at www.irs.gov, or by calling the IRS at 800-829-3676. You should share these documents with your accountant.

© 2006 www.PublishingBiz.com, reprinted with permission.

***********************


About the Author: The Publishing Business Group is an alliance of independent publishing consultants in the San Francisco Bay Area. Their group includes experts in editing, design, market research, circulation, advertising sales, online advertising sales, strategic planning, and business management. They often work together on projects where their individual skills combine to provide their clients with a complete solution to their needs. Each of them is also available independently from the others.

Most of these FAQs come from their upcoming book, due in Spring 2007 from Nolo Press and tentatively titled, Effective Publishing for Nonprofit Organizations. For more information about the Publishing Business Group and their upcoming book please visit them at their web site: http://www.publishingbiz.com/.



Editor's Picks

Fundraising Booklets
Cookiedough Fundraising
Scratchcard Fundraising
Safe Fundraising



Recommended Suppliers

Constant Contact
The gold standard in nonprofit email newsletter delivery. Custom newsletter templates, funding appeals, event updates & more. 20% nonprofit discount!

www.constantcontact.com


Recommended Books

7 Essential Steps to Raising Money by Mail
Learn with practical examples, detailed checklists, writing helps and other tools. Sample letters for different types of solicitations and for different nonprofit groups. A step by step guide to writing fundraising letters.

www.StepByStepFundraising.com

Silent Auction Guide & Toolkit
Learn how to create a successful silent auction fundraiser. Silent auction strategies, timelines, auction items and how to organize and display them, how to close an auction and take payments, and other add on fundraisers to boost the bottom line of your silent auction.

www.StepByStepFundraising.com

Let's Raise Money
The inside scoop about small group fundraising. Learn from the founder of a national fundraising company as he reveals secrets observed over nearly two decades of fundraising.
www.LetsRaiseMoney.com
Read a Free Excerpt

The Ultimate Guide to Planning a 5K Run or Walk Fundraiser
Plan a successful race from scratch. Proven marketing strategies, find and manage volunteers, maximize revenues, recruit and motivate teams. Checklists, forms, speadsheets, worksheets all included.

www.CharityMile.com

Secrets of the Charity Auction Experts
Learn from the experts! Discover the best selling auction items. How to get auction items donated. How to boost attendance. How to get more bids and higher selling prices. How to coordinating volunteers, staff and auction consultants.

www.StepByStepFundraising.com

Grant Writing for Beginners
Learn how to quickly and easily establish relationships with regional foundations and build a strong base of grant support for your nonprofit.

www.WriteGrantProposals.com
Read a Free Excerpt




Index / Subscribe Free / Contact Info / Fundraising Yellow Pages
Fundraising Newsletter / Fundraising Booklets
Fundraising Classifieds / Fundraising Links


ISSN 1530-5813 - Library of Congress, Washington DC, USA
copyright © 1996 - 2010 all rights reserved Fund$Raiser Cyberzine