Non-profit organizations are provided special tax status under section 501(c) of the Internal Revenue Code. These groups are required to pay an “unrelated business income tax” or UBIT on its commercial or “non-exempt” activities. The Federal Government first exempted charitable organizations from tax in 1913. In 1950, in response to complaints about unfair competition, Congress changed the tax law by creating the UBIT. Under UBIT, revenues from sources unrelated to the non- profit’s tax-exempt purpose are subject to taxation.

The Small Business Administration’s (SBA) Office of Advocacy will participate in a listening capacity to hear from a wide range of markets, professions and industries. The SBA is considering this issue as part of a White House  “Innovation Initiative,” an effort focused on the specific needs and concerns faced by companies and entrepreneurs.