Revenue from advertising the goods and services of another organization is generally unrelated business income (UBI) to a tax-exempt organization, reportable on Form 990 and Form 990-T. However, identifying and acknowledging a generous donor should not turn Contribution Revenue into Advertising Income as long as certain rules are followed. Where is the line between acknowledging a sponsor and promoting their products?AdvertisingAdvertising is a payment from an outsider in which the outsider receives a substantial return benefit. An advertisement:• Promotes or encourages the use of the trade, business, service, facility, or product of the payor• “Visit today and check out their...
Many nonprofit, tax-exempt organizations maintain lists of donors, members, and other supporters. The list will often include names, titles, employers, phone numbers, physical addresses, email addresses, and additional identifying information. Outside organizations, particularly commercial entities, seek to purchase or otherwise access the mailing list to promote their products.Access to the nonprofit organization’s membership list is often part of a larger contract, commonly referred to as an affinity agreement. In general, a tax-exempt organization can enter into affinity agreements that benefit its members, and it may inform and educate the members about such programs. However, when the tax-exempt organization becomes contractually...
