Delirium wrote:
Michael R. Irwin wrote:
Delirium wrote:
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.
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?
Any background you care to provide regarding where you gained this knowledge would also be appreciated but I can follow up elsewhere if you do not care to provide that private information on a public mailing list.
The official guidelines on the subject are in IRS publication 557, "Tax-Exempt Status for Your Organization". The relevant chapter for the Wikimedia Foundation is chapter 3 on 501(c)(3) organizations (online: http://www.irs.gov/publications/p557/ch03.html).
I was a bit imprecise; these aren't requirements for all non-profit organizations, but specifically for 501(c)(3) organizations, the type that are required to be public charities. That gives added benefits over private charities (like the Gates foundation), such as allowing people who donate money to deduct those donations from their taxes. It also includes added requirements; for example, they must serve a public purpose (rather than a community or niche purpose), must spend their money on activities that advance that public purpose (not social activities), and must receive a substantial amount of their monetary support from the general public, either directly or through government entities or other public charities. One-third support seems to be the official line above which the organization is safe; if the public support is less than that but above 10%, it's still possible to maintain the status, but things get trickier.
Excellent expansion and clarification Mark! Thank you very much. I think that gives me as much knowledge as I wish to have on this subject for the moment. I do appreciate the links to further specific information and will file this note for future reference if I ever get involved in assisting with the launch or maintenance of a non profit. Thanks again!
Sincerely, Michael R. Irwin