Commercial nonprofits – IRS finds rapid growth

Nonprofit organizations are accelerating their commercial activities, The Wall Street Journal reported July 12.

Taxable profits from unrelated business activities of tax-exempt organizations grew 31 percent in 1996 to $1.2 billion, the Internal Revenue Service says in its latest Statistics of Income Bulletin.

Unrelated business income grew 35 percent to $372.3 million, according to the IRS.

Nonprofits can generate income, within limits, from activities not related to their tax-exempt purpose, the Journal says.

But nonprofits also generally must pay taxes from actitivies that are “regularly carried on” and are not “substantially related” to their mission.

The big increases in 1996 followed even larger percentage growth the previous year, the Journal says.

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