Unrelated Business Income for Non-Profits

08/26/2025 | Cross + Co - Insights |

Unrelated Business Income for Non-Profits: What You Need to Know

Few topics cause more confusion for nonprofit leaders than Unrelated Business Income (UBI).

UBI arises when a nonprofit regularly earns revenue from commercial activities that aren’t substantially related to its exempt purpose—think beyond donations and mission-driven programs.

While not illegal, UBI is taxable, and mishandling it can lead to IRS penalties or even risk to your exempt status.

Common examples include certain

  • Rental income
  • Liquor sales
  • Ongoing sales of goods, or services offered in a commercial manner.

The key takeaway: understand what qualifies as UBI, track it separately, and ensure compliance through proper reporting (Form 990-T) so your mission remains fully protected.

Nonprofit leaders: what UBI questions or challenges have you faced?

Let’s connect to ensure your non-profit is compliant. Email me to discuss!