In a message dated 3/28/98 7:31:30 AM EST, [log in to unmask] writes:

> It seems that there is this predominant
>  belief that a non-profit functions *at cost* and without a profit. This
>  conflicts with my concept of organizational survival, regardless of tax
>  status or labels.

There's a great discussion of this issue in the book, "The 21st Century
Nonprofit," by Paul B. Firstenberg (published by The Foundation Center). It
says that "the tax law does not bar nonprofit enterprises (other than private
foundations) from actively engaging in business activities and even earning a
profit, provided that the profit is used to support the organization's exempt
purposes and does not inure to the benefit of private individuals. In general,
as long as the generation of income is a means of promoting the organization's
social aims rather than an end in itself, it is an appropriate activity for a
nonprofit institution.

"However, the fact that an organization (other than a private foundation) may
freely engage inbusiness activites without jeopardizing its exempt status does
not mean that the income from such endeavors will necessarily excape taxation
. . ."

". . .If the revenues are generated by an activity that is related to the
organization's exempt purposes, they will be exempt ... If the income is
generated in a manner that is unrelated to the organization's purpose (e.g.,
if a university owns a factory), the income with be subject to federal income
taxes with certain classes of exceptions ..."

Great book! and very handy for those interested in non-profit stuff of all
kinds. Some non-profits have enormous budgets with a lot of revenue generation
-- may we all have the same good fortune.

Mary Krugman