As a nonprofit organization, you were founded with a benevolent purpose to pursue a mission to aid your community through charitable, education and other types of endeavors. To help achieve this mission, your organization engages in fundraising and other income-generating activities in order to support the organization’s purpose. The tax law typically provides nonprofit entities with a tax-exempt status, meaning that they do not ordinarily have to pay taxes on the monies that they earn.
This does not, however, apply to all of the earnings that a nonprofit can make. Depending on the type of income a nonprofit organization earns, they may be subject to taxation, known as unrelated business income.
In this article, we will explore potential taxable income for nonprofit entities and the implications that has for your organization.
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