1. UBI Pitfalls: Don’t Lose Your Tax Exemption

UBI Pitfalls: Don’t Lose Your Tax Exemption

Event ID: 2192424
Duration: 50 Minutes
Presenter: Zachary Kester, JD, LLM, CFRM, Executive Director & Managing Attorney, Charitable Allies
Credits: Certificate of Attendance

UBI Pitfalls: Don’t Lose Your Tax Exemption

Forty-nine percent (49%) of revenue for nonprofit organizations is earned revenue—meaning it was paid as fee-for-service. An additional thirty-two percent (32%) is earned from governmental contracts or grants. Only fourteen percent (14%) of revenue comes from donations and foundation grants. It’s no wonder, then, that most nonprofits are expanding programming or business lines to increase revenue.

As long as these business lines are closely “related” to the charitable purposes of the organization, this is not a problem. But when the programming or business lines are not closely related, then they become unrelated business income (UBI), which is subject to UBI taxation (UBIT), and can—if too large—threaten the tax exemption of the organization.

This webinar will help nonprofit leaders avoid UBI pitfalls and risk losing their organization’s crucial tax exemption.


Just a sampling of what this webinar will cover:

  • How to assess “relatedness” and characterize certain business activity as related, and thus non-UBI
  • Common exceptions and modifications to UBI
  • How to identify whether the activity is a “business” or whether it is acceptably passive, and thus non-UBI
  • How to structure programming or business lines to meet the UBI exceptions or modifications
  • The purpose of a “blocker corporation” structure, and how to insert such an intermediary between the business activity and the nonprofit, so as to convert UBI into “passive” income

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