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How much earned income can a nonprofit generate before risking its tax exempt status?

April 26, 2017earned exempt income nonprofit risking Status tax

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How much earned income can a nonprofit generate before risking its tax exempt status?

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(1) From Jim Fruchterman Disclaimer: I am not an attorney. I think the question needs clarification. A nonprofit can earn 100% of its monies from earned income venture. Not a problem: done frequently. The key issue is that there’s not a problem if the earned income is from a venture that is clearly related to the nonprofit mission. The question that has been kicked around here is about problems when the earned income is Unrelated Business Income. And, the answer is, that there is no clear answer. I don’t believe there’s a regulation that you can look it up. There is no bright line. And, this is why you need an attorney who knows what they’re doing if the UBI gets to be a significant part of what’s funding your nonprofit, to help you assess the risks. [Posted 3/7/05] (2) From Warren Tranquada My understanding is that the % of effort can not be “significant”, which is normally not more than 15-20% of the non-profit’s effort. The IRS doesn’t give