In the United States, National Public Radio has run into the slippery slope of providing "underwriting credits" in return for sponsorships. NPR is tax exempt, listener sponsored (NPR stations beg periodically), and has a government-mandated educational mission. "Underwriting credits" started small and were focused on a particular program. "Funding for religion coverage on 'All Things Considered' was provided by the Peter Q. and Frieda P. Jones foundation." (I made that one up.) However, then the individual radio stations started to get into the act. Now, the format for many programs is to halt at 20 minutes past the hour and 20 minutes to the hour for the equivalent of a bunch of commercials. On my NPR station, they are all read by the "serious" NPR announcer, but that too may change. Marcello, I don't believe that your reference to unrelated business income tax (UBIT) would apply to us even if we did sell advertising space. Most cases of UBIT that I am familiar with are when a not-for-profit engages in a for profit business on the side. For example, if a church runs a bookstore, then they would pay UBIT on the profits from the bookstore because selling books is not part of their mission as a church. I am aware of a case where a church owns a building and meets on the second floor while the ground floor houses a grocery store. The rent that they receive from the grocery store is subject to UBIT. However, I too am not a lawyer (nor do I play one on TV). John Hagerson -----Original Message----- From: gutvol-d-bounces@lists.pglaf.org [mailto:gutvol-d-bounces@lists.pglaf.org] On Behalf Of Greg Newby Sent: Monday, April 24, 2006 12:28 AM To: Project Gutenberg Volunteer Discussion Subject: Re: [gutvol-d] Sponsors Somehow I missed this one earlier: On Mon, Mar 20, 2006 at 06:34:39PM +0100, Marcello Perathoner wrote:

Greg Newby wrote:

...

No, we can't sell ad space at all. Neither PGLAF, nor ibiblio.

I'm not sure this is true:

It's against iBiblio's rules. It's outside of PGLAF's mission. It probably is legal, but that wasn't what I mean't by "can't." -- Greg

"501 (b) Tax on unrelated business income and certain other activities An organization exempt from taxation under subsection (a) shall be subject to tax to the extent provided in parts II, III, and VI of this subchapter, but (notwithstanding parts II, III, and VI of this subchapter) shall be considered an organization exempt from income taxes for the purpose of any law which refers to organizations exempt from income taxes."

http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00000501----000-. html

IANAL but this means to me that we would have to pay taxes on the ad revenues, but selling ads would not endanger our non-profit status.

But the more interesting question is: if we just display standard "thank you" notices for donations received, without letting the donor choose the text, would this be considered "selling ads" or just being nice to our donors?

-- Marcello Perathoner webmaster@gutenberg.org

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