On 4/23/06, Michael R. Irwin michael_irwin@verizon.net wrote:
Delirium wrote:
Gregory Maxwell wrote:
I'd guess the open questions would be:
- How would this impact the charitable non-profit status of WMF?
The general rule is that a non-profit organization should have at least one-third of its annual income come from a combination of: governmental donations, donations from other public charities, and small (less than 2% of total income each) donations from the general public and private charities (large donations can still have the first 2% counted). If that all adds up to less than 1/3, things get considerably more complicated.
Whether advertising income would cause a problem depends on how much we expect to get, and how much in large donations from private individuals and charities we typically get.
-Mark
Interesting information. Do you have any further detail. Is the above a good general guideline because it is mandated by law; accepted as good practice by accountants, IRS, rating organization, possible donors or other?
Presumably he is referring to the "public support test", section 509 of the Internal Revenue Code. Failure to meet the test would have the organization deemed a private foundation which would have significant negative tax effects. In extremely excessive cases the organization could completely lose its non-profit status.
Anthony