Sponsorships, Advertising, Endorsements, and Cause Marketing: Understanding Critical UBIT Issues for Nonprofits


In This Issue:

UBIT Basics; Is the Income Taxable? Corporate Partnerships Maximizing Income; Corporate Sponsorship Income; Acknowledgment vs. Advertising; What is a Royalty? and, Cause Marketing.

- UBIT Basics

..General Rule Organization recognized as exempt does not pay income tax on most income received by organization.

..Exception If the income received is unrelated business income (UBI), it is subject to taxation. Organization must report and pay tax at corporate rates.

- Is the Income Taxable?

..Unrelated Business Income Tax (UBIT)

– It is a trade or business,

– It is regularly carried on, and

– It is not substantially related to furthering the exempt purposes of the organization.

..Taxability of the income received will depend on contents of contract, reality of relationship

..Educational event registration fees — ALMOST NEVER

..Conference and Trade Show Revenue – ALMOST NEVER

..Advertising — ALMOST ALWAYS

..Consumer products unrelated to mission – ALMOST


..Job banks / referral activities – ALMOST ALWAYS

Please see full presentation below for more information.

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Published In: Business Organization Updates, General Business Updates, Intellectual Property Updates, Nonprofits Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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