Nonprofit Social Enterprise and Earned Revenue Compliance
Social enterprise and earned revenue strategies diversify nonprofit funding but create complex tax and mission alignment considerations. This quarterly review ensures earned revenue activities are properly analyzed for UBIT, mission-related, and financial sustainability.
- Industry: Nonprofit
- Frequency: Quarterly
- Estimated Time: 2-3 hours
- Role: Executive Director / CFO
- Total Items: 24
Mission Alignment Assessment
Assess earned revenue mission alignment.
- All earned revenue activities substantially related to exempt purpose?
- Mission-related activities remain primary purpose (more than 50% of resources)?
- New earned revenue activities reviewed for mission alignment before launch?
- Board overseeing earned revenue activities for mission alignment?
UBIT Analysis
Analyze potential UBIT liability.
- All potentially unrelated business activities inventoried?
- Frequency test: activities regularly carried on (not one-time)?
- UBIT gross income tracked separately from related income?
- Annual UBIT gross income monitored against $1,000 Form 990-T filing threshold?
- Allowable deductions against UBIT income properly identified and documented?
Fee-for-Service Contracts
Review fee-for-service compliance.
- Written contracts in place for all fee-for-service arrangements?
- Government service contracts reviewed for procurement compliance?
- Fee rates reasonable and covering full costs of service delivery?
- Sliding scale fee policies documented and consistently applied?
Sales Tax Compliance
Verify sales tax compliance.
- State sales tax exemption applicability reviewed for earned revenue activities?
- Sales tax collected and remitted where required?
- Sales tax nexus in all states where selling online assessed?
Subsidiary Structures
Review subsidiary structures.
- Any for-profit subsidiary relationships properly documented and arm's length?
- Related party transactions with any subsidiary disclosed on Form 990?
- Subsidiary with separate board maintaining independence?
Financial Performance Analysis
Analyze earned revenue financial performance.
- Revenue and full cost tracked by earned revenue activity?
- Any mission-subsidized programs clearly distinguished from revenue-generating activities?
- Break-even analysis completed for each earned revenue activity?
- Social return from enterprise activities (mission served) measured alongside financial return?
- Earned revenue portfolio performance reviewed by board annually?
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Why Use This Nonprofit Social Enterprise and Earned Revenue Compliance?
This nonprofit social enterprise and earned revenue compliance helps nonprofit teams maintain compliance and operational excellence. Designed for executive director / cfo professionals, this checklist covers 24 critical inspection points across 6 sections. Recommended frequency: quarterly.
Frequently Asked Questions
What does the Nonprofit Social Enterprise and Earned Revenue Compliance cover?
This checklist covers 24 inspection items across 6 sections: Mission Alignment Assessment, UBIT Analysis, Fee-for-Service Contracts, Sales Tax Compliance, Subsidiary Structures, Financial Performance Analysis. It is designed for nonprofit operations and compliance.
How often should this checklist be completed?
This checklist should be completed quarterly. Each completion takes approximately 2-3 hours.
Who should use this Nonprofit Social Enterprise and Earned Revenue Compliance?
This checklist is designed for Executive Director / CFO professionals in the nonprofit industry. It can be used for self-assessments, team audits, and regulatory compliance documentation.
Can I download this checklist as a PDF?
Yes, this checklist is available as a free PDF download. You can also use it digitally in the POPProbe mobile app for real-time data capture, photo documentation, and automatic reporting.