[Foundation-l] Optional advertisement on wikipedia

Sun Apr 23 23:38:16 UTC 2006

Michael R. Irwin wrote:
> Delirium wrote:
>   
>> The general rule is that a non-profit organization should have at least 
>> one-third of its annual income come from a combination of: governmental 
>> donations, donations from other public charities, and small (less than 
>> 2% of total income each) donations from the general public and private 
>> charities (large donations can still have the first 2% counted).  If 
>> that all adds up to less than 1/3, things get considerably more complicated.
>>
>> Whether advertising income would cause a problem depends on how much we 
>> expect to get, and how much in large donations from private individuals 
>> and charities we typically get.
>>     
> Interesting information.   Do you have any further detail.   Is the 
> above a good general guideline because it is mandated by law;  accepted 
> as good practice by accountants, IRS, rating organization, possible 
> donors or other?
>
> Any background you care to provide regarding where you gained this 
> knowledge would also be appreciated but I can follow up elsewhere if you 
> do not care to provide that private information on a public mailing list.
>   

The official guidelines on the subject are in IRS publication 557, 
"Tax-Exempt Status for Your Organization".  The relevant chapter for the 
Wikimedia Foundation is chapter 3 on 501(c)(3) organizations (online: 
http://www.irs.gov/publications/p557/ch03.html).

I was a bit imprecise; these aren't requirements for all non-profit 
organizations, but specifically for 501(c)(3) organizations, the type 
that are required to be public charities.  That gives added benefits 
over private charities (like the Gates foundation), such as allowing 
people who donate money to deduct those donations from their taxes.  It 
also includes added requirements; for example, they must serve a public 
purpose (rather than a community or niche purpose), must spend their 
money on activities that advance that public purpose (not social 
activities), and must receive a substantial amount of their monetary 
support from the general public, either directly or through government 
entities or other public charities.  One-third support seems to be the 
official line above which the organization is safe; if the public 
support is less than that but above 10%, it's still possible to maintain 
the status, but things get trickier.

-Mark