The IRS’s announcement on July 17, 2018 that it will no longer require Form 990 Schedule B donor disclosures sent shock waves through the tax-exempt sector. While such action reflects notable government restraint and certainly affects many tax-exempt organizations, there is no change for Section 501(c)(3) organizations that file Form 990s or for Section 527 “political action committee” (PAC) reporting. So why the change, and what are its implications?
May a Section 501(c)(3) nonprofit engage in business operations to generate revenue? Such organizations often brainstorm creative solutions to accomplish their charitable purposes and ensure revenue is sufficient to support their charitable endeavors, including business-related ideas. These activities may blur the lines between a nonprofit organization engaging in permissible commercial activity, on the one hand, and a de facto for-profit business with charitable overtones. How does a Section 501(c)(3) stay tax-exempt within applicable IRS constraints, and yet carry on a profit-generating business? The “Newman’s Own” exception provides a fascinating example of charity mixed with business, within the broader context of other more common and far less complex nonprofit operational models.
With summer in the air many nonprofits enter in the heart of the season for their charitable, educational, and religious programming. As mission trips, camp excursions, hikes, and canoe trips fill up the calendar, many nonprofits pull out their tried and true “Waiver and Consent” forms and “Parental Permission” forms. Are these forms an effective risk management tool?