Current Issues of Nonprofit Corporation Finance: A Partial Alternative to Cross-Subsidization in the Commercial Arena
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Authors
Taylor, John A.
Issue Date
1997
Type
Thesis
Language
en_US
Keywords
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Abstract
This paper deals exclusively with the issues surrounding the nonprofit sector
of the economy. It looks at the characteristics of the nonprofit sector, market
rationale for its existence, the issues surrounding federal tax exemption, and the
debate about unfair competition between tax-exempt nonprofits and for-profit firms
within the commercial arena. A brief description of the responsibilities of a
nonprofit finance manager will also be presented. It is this relationship between the
nonprofit corporation and its financial manager that merits the most discussion. As
government funding for pubic services is further cut, the role of the nonprofit sector is
increased; however, their current funding simply cannot support much expansion.
Many nonprofits have resorted to entering the commercial sector to cross-subsidize
their central missions with the profits earned. This has caused considerable concern
among entrepreneurs, especially those initiating small businesses. While the
government has instituted an unrelated business income tax (UBIT) that applies to all
profits received from business not directly related a nonprofit's central mission, many
members of the business community still say that nonprofits have an unf~ir
competitive edge. An alternative source of revenue for nonprofits would remove the
incentive for nonprofits to enter the commercial arena, thus allowing them to
concentrate on their central mission. Seemingly the interests of both sectors and
society as a whole would be catered to if an alternative income source could be
realized.
Description
iii, 272 p.
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License
U.S. copyright laws protect this material. Commercial use or distribution of this material is not permitted without prior written permission of the copyright holder.