Sponsorship Blog

Posts Tagged “Taxation”

Jim Andrews Jun 30

The Taxman Cometh?

Amid all of the tribulations brought on by a bad economy, nonprofits and their corporate partners certainly don’t need one more. But recessions impact governments too, and can cause them to look long and hard for ways to generate additional revenue to replace tax dollars lost. So it shouldn’t surprise that the U.S. government is raising the specter of taxing some sponsorship revenue. Specifically, the Congressional Budget Office issued a paper last month titled “Tax Preferences for Collegiate Sports,” which can be downloaded here (http://www.cbo.gov/doc.cfm?index=10055). The document suggests that Congress consider reclassifying certain types of income derived from athletic programs as subject to unrelated business income tax, including income from corporate sponsorship. The justification for doing so is predicated mostly on the commercial nature of sports programs at many universities and the loose connection between those programs and the schools’ educational mission (unrelated business) combined with the significant benefits that accrue to the sponsors. Although the CBO’s suggestion has many logical underpinnings, there are a number of reasons why it should raise real concern among all nonprofits and their corporate partners. For those outside of colleges and universities who may view this paper as irrelevant to them, let us remind you that the movement to scrutinize all nonprofit sponsorship revenue in the ’90s began with a single examination into the sponsorship revenues of the Mobil Cotton Bowl college football game. A few members of Congress might very well read this latest report and seek to apply its reasoning to sponsorship activities of zoos, museums, charities, etc.  more

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