Q: 501(c)(3) Organization

Which agency? IRS Definition : A type of United States nonprofit organization that is exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code. To qualify for this status, the organization must be organized and operated exclusively for one of the following “exempt” purposes: Charitable Religious Educational Scientific Literary Testing for public safety Fostering national or international amateur sports competition Preventing cruelty to children or animals How it relates to public media: Most public media stations - and indeed national organizations like PBS, NPR and Greater Public - are organized around an educational, public safety, and/or charitable mission and operate as independent 501(c)(3) organizations.

Q: Advertising

Which agency? FCC and IRS Definition : Any message which, in exchange for consideration, promotes or markets any trade or business or any service, facility or product. How it relates to public media: FCC: As non-commercial broadcasters, public media stations are NOT allowed to broadcast advertising as per FCC regulations. The FCC does not however regulate messaging on digital or print channels, nor at in-person events. The FCC also allows greater flexibility on-air - i.e. promotional language or essentially advertising - if the business providing consideration is itself a non-profit organization. Whether to grant more flexibility to non-profit underwriters though is a station policy decision and not one that should be made lightly. IRS: Advertising is NOT considered an exempt function by the IRS for a 501(c)(3) organization. This means that if a station were to engage in advertising on non-broadcast platforms as a regular revenue source, it could/would likely have to pay federal income taxes on that revenue, i.e. unrelated business income tax (UBIT).

Q: Underwriting

Which agency? FCC Definition : Consideration from a business or corporate donor received with no expectation of substantial return, other than an acknowledgement of the donor and the trade or business in which it is engaged. How it relates to public media: Public media stations are authorized to engage in the offering of program matter (as well as services, facilities or products) in exchange for remuneration, i.e. underwriting. Announcements acknowledging such consideration may be broadcast on air - and may include business and institutional logos - provided that the messages and logos themselves do not promote the products, services or facilities of the for-profit business providing consideration. (If the messages are promotional, they are considered advertising vs. underwriting). FCC Guidelines regulate the content and specifics of on-air underwriting messages on public media. Perhaps first and foremost among these guidelines, the sponsorship ID provision states that when a sponsor provides a licensee with consideration in exchange for transmitting any program matter, the licensee must announce that such programming was paid for or furnished by funds, goods or services provided by that sponsor and the sponsor must be identified accurately.

Q: Unrelated Business Income Tax (UBIT)

Which agency? IRS Definition : Section 512(a)(1) of the Internal Revenue Code of 1986 provides that a tax-exempt organization is taxable on gross income derived from an unrelated trade or business, regularly carried on, less allowable deductions directly connected with the trade or business. How it relates to public media: If public media stations regularly engage in trade or business that is unrelated to the exempt purposes of their organization, then that trade or business may be subject to UBIT. Advertising - if present on digital or print channels (which are not regulated by the FCC) - or on-air for nonprofit underwriters (where the FCC grants greater flexibility in messaging) - is considered unrelated to the exempt purposes of public media organizations. Thus, UBIT likely applies to advertising if carried out on a regular basis by public media stations.

Q: 501(c)(3) Organization

Which agency? IRS Definition : A type of United States nonprofit organization that is exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code. To qualify for this status, the organization must be organized and operated exclusively for one of the following “exempt” purposes: Charitable Religious Educational Scientific Literary Testing for public safety Fostering national or international amateur sports competition Preventing cruelty to children or animals How it relates to public media: Most public media stations - and indeed national organizations like PBS, NPR and Greater Public - are organized around an educational, public safety, and/or charitable mission and operate as independent 501(c)(3) organizations.

Q: Advertising

Which agency? FCC and IRS Definition : Any message which, in exchange for consideration, promotes or markets any trade or business or any service, facility or product. How it relates to public media: FCC: As non-commercial broadcasters, public media stations are NOT allowed to broadcast advertising as per FCC regulations. The FCC does not however regulate messaging on digital or print channels, nor at in-person events. The FCC also allows greater flexibility on-air - i.e. promotional language or essentially advertising - if the business providing consideration is itself a non-profit organization. Whether to grant more flexibility to non-profit underwriters though is a station policy decision and not one that should be made lightly. IRS: Advertising is NOT considered an exempt function by the IRS for a 501(c)(3) organization. This means that if a station were to engage in advertising on non-broadcast platforms as a regular revenue source, it could/would likely have to pay federal income taxes on that revenue, i.e. unrelated business income tax (UBIT).

Q: Underwriting

Which agency? FCC Definition : Consideration from a business or corporate donor received with no expectation of substantial return, other than an acknowledgement of the donor and the trade or business in which it is engaged. How it relates to public media: Public media stations are authorized to engage in the offering of program matter (as well as services, facilities or products) in exchange for remuneration, i.e. underwriting. Announcements acknowledging such consideration may be broadcast on air - and may include business and institutional logos - provided that the messages and logos themselves do not promote the products, services or facilities of the for-profit business providing consideration. (If the messages are promotional, they are considered advertising vs. underwriting). FCC Guidelines regulate the content and specifics of on-air underwriting messages on public media. Perhaps first and foremost among these guidelines, the sponsorship ID provision states that when a sponsor provides a licensee with consideration in exchange for transmitting any program matter, the licensee must announce that such programming was paid for or furnished by funds, goods or services provided by that sponsor and the sponsor must be identified accurately.

Q: Unrelated Business Income Tax (UBIT)

Which agency? IRS Definition : Section 512(a)(1) of the Internal Revenue Code of 1986 provides that a tax-exempt organization is taxable on gross income derived from an unrelated trade or business, regularly carried on, less allowable deductions directly connected with the trade or business. How it relates to public media: If public media stations regularly engage in trade or business that is unrelated to the exempt purposes of their organization, then that trade or business may be subject to UBIT. Advertising - if present on digital or print channels (which are not regulated by the FCC) - or on-air for nonprofit underwriters (where the FCC grants greater flexibility in messaging) - is considered unrelated to the exempt purposes of public media organizations. Thus, UBIT likely applies to advertising if carried out on a regular basis by public media stations.

Question 1

501(c)(3) Organization

Accepted Answer

Which agency? IRS

Definition:
A type of United States nonprofit organization that is exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code. To qualify for this status, the organization must be organized and operated exclusively for one of the following “exempt” purposes:

Charitable
Religious
Educational
Scientific
Literary
Testing for public safety
Fostering national or international amateur sports competition
Preventing cruelty to children or animals

How it relates to public media:
Most public media stations - and indeed national organizations like PBS, NPR and Greater Public - are organized around an educational, public safety, and/or charitable mission and operate as independent 501(c)(3) organizations.

Question 2

Advertising

Accepted Answer

Which agency? FCC and IRS

Definition:
Any message which, in exchange for consideration, promotes or markets any trade or business or any service, facility or product.

How it relates to public media:

FCC: As non-commercial broadcasters, public media stations are NOT allowed to broadcast advertising as per FCC regulations. The FCC does not however regulate messaging on digital or print channels, nor at in-person events. The FCC also allows greater flexibility on-air - i.e. promotional language or essentially advertising - if the business providing consideration is itself a non-profit organization. Whether to grant more flexibility to non-profit underwriters though is a station policy decision and not one that should be made lightly.
IRS: Advertising is NOT considered an exempt function by the IRS for a 501(c)(3) organization. This means that if a station were to engage in advertising on non-broadcast platforms as a regular revenue source, it could/would likely have to pay federal income taxes on that revenue, i.e. unrelated business income tax (UBIT).

Question 3

Underwriting

Accepted Answer

Which agency? FCC

Definition:
Consideration from a business or corporate donor received with no expectation of substantial return, other than an acknowledgement of the donor and the trade or business in which it is engaged.

How it relates to public media:

Public media stations are authorized to engage in the offering of program matter (as well as services, facilities or products) in exchange for remuneration, i.e. underwriting. Announcements acknowledging such consideration may be broadcast on air - and may include business and institutional logos - provided that the messages and logos themselves do not promote the products, services or facilities of the for-profit business providing consideration. (If the messages are promotional, they are considered advertising vs. underwriting). FCC Guidelines regulate the content and specifics of on-air underwriting messages on public media.
Perhaps first and foremost among these guidelines, the sponsorship ID provision states that when a sponsor provides a licensee with consideration in exchange for transmitting any program matter, the licensee must announce that such programming was paid for or furnished by funds, goods or services provided by that sponsor and the sponsor must be identified accurately.

Question 4

Unrelated Business Income Tax (UBIT)

Accepted Answer

Which agency? IRS

Definition:
Section 512(a)(1) of the Internal Revenue Code of 1986 provides that a tax-exempt organization is taxable on gross income derived from an unrelated trade or business, regularly carried on, less allowable deductions directly connected with the trade or business.

How it relates to public media:
If public media stations regularly engage in trade or business that is unrelated to the exempt purposes of their organization, then that trade or business may be subject to UBIT. Advertising - if present on digital or print channels (which are not regulated by the FCC) - or on-air for nonprofit underwriters (where the FCC grants greater flexibility in messaging) - is considered unrelated to the exempt purposes of public media organizations. Thus, UBIT likely applies to advertising if carried out on a regular basis by public media stations.

Question 5

501(c)(3) Organization

Accepted Answer

Which agency? IRS

Definition:
A type of United States nonprofit organization that is exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code. To qualify for this status, the organization must be organized and operated exclusively for one of the following “exempt” purposes:

Charitable
Religious
Educational
Scientific
Literary
Testing for public safety
Fostering national or international amateur sports competition
Preventing cruelty to children or animals

How it relates to public media:
Most public media stations - and indeed national organizations like PBS, NPR and Greater Public - are organized around an educational, public safety, and/or charitable mission and operate as independent 501(c)(3) organizations.

Question 6

Advertising

Accepted Answer

Which agency? FCC and IRS

Definition:
Any message which, in exchange for consideration, promotes or markets any trade or business or any service, facility or product.

How it relates to public media:

FCC: As non-commercial broadcasters, public media stations are NOT allowed to broadcast advertising as per FCC regulations. The FCC does not however regulate messaging on digital or print channels, nor at in-person events. The FCC also allows greater flexibility on-air - i.e. promotional language or essentially advertising - if the business providing consideration is itself a non-profit organization. Whether to grant more flexibility to non-profit underwriters though is a station policy decision and not one that should be made lightly.
IRS: Advertising is NOT considered an exempt function by the IRS for a 501(c)(3) organization. This means that if a station were to engage in advertising on non-broadcast platforms as a regular revenue source, it could/would likely have to pay federal income taxes on that revenue, i.e. unrelated business income tax (UBIT).

Question 7

Underwriting

Accepted Answer

Which agency? FCC

Definition:
Consideration from a business or corporate donor received with no expectation of substantial return, other than an acknowledgement of the donor and the trade or business in which it is engaged.

How it relates to public media:

Public media stations are authorized to engage in the offering of program matter (as well as services, facilities or products) in exchange for remuneration, i.e. underwriting. Announcements acknowledging such consideration may be broadcast on air - and may include business and institutional logos - provided that the messages and logos themselves do not promote the products, services or facilities of the for-profit business providing consideration. (If the messages are promotional, they are considered advertising vs. underwriting). FCC Guidelines regulate the content and specifics of on-air underwriting messages on public media.
Perhaps first and foremost among these guidelines, the sponsorship ID provision states that when a sponsor provides a licensee with consideration in exchange for transmitting any program matter, the licensee must announce that such programming was paid for or furnished by funds, goods or services provided by that sponsor and the sponsor must be identified accurately.

Question 8

Unrelated Business Income Tax (UBIT)

Accepted Answer

Which agency? IRS

Definition:
Section 512(a)(1) of the Internal Revenue Code of 1986 provides that a tax-exempt organization is taxable on gross income derived from an unrelated trade or business, regularly carried on, less allowable deductions directly connected with the trade or business.

How it relates to public media:
If public media stations regularly engage in trade or business that is unrelated to the exempt purposes of their organization, then that trade or business may be subject to UBIT. Advertising - if present on digital or print channels (which are not regulated by the FCC) - or on-air for nonprofit underwriters (where the FCC grants greater flexibility in messaging) - is considered unrelated to the exempt purposes of public media organizations. Thus, UBIT likely applies to advertising if carried out on a regular basis by public media stations.

A Bit About UBIT: A Corporate Support Guide to Unrelated Business Income Tax

Anna McDonald

Laura Landress

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