New revenue idea? Watch out for the commerciality doctrine - Crawford Ellenbogen

The commerciality doctrine was created to address concerns over not-for-profits competing at an unfair tax advantage with for-profit businesses. Even business activities related to your nonprofit’s exempt purpose could cause you to lose your tax-exempt status. Courts consider several factors, including whether you sell to the general public, set prices to maximize profits, use promotional methods such as advertising and accumulate unreasonable reserves. Also know that you may risk unrelated business income tax even if you pass muster under the commerciality doctrine. Contact us for more information.