Research and recommendations for effective, day-to-day nonprofit practice from ASU faculty, staff, students, and the nonprofit and philanthropic community.
Nonprofit organizations across the sector are struggling to raise enough funds to keep their mission-driven work going. One possible solution to this sector-wide issue that individual organizations can enact is pursuit of what is referred to by the Internal Revenue Service (IRS) as unrelated business income (UBI). UBI funds are unrestricted, meaning they may be used for any purpose the organization deems most appropriate.
Overview of IRS requirements
Nonprofit organizations (501(c)(3) organizations, specifically) are required to pay income tax on any UBI. This unrelated business income tax, or UBIT, is reported on a supplementary tax form called the Form 990-T. UBI is defined as “the income from a trade or business regularly conducted by an exempt organization and not substantially related to the performance by the organization of its exempt purpose or function.” Although the exact definition of “substantial” is not supplied by the IRS, a business activity does not qualify as substantially related to an organization’s mission if its primary purpose is to provide income to the organization. The vague definition of “substantial” has caused some confusion among practitioners. However, failure to correctly report and pay UBIT can result in revocation of an organization’s tax exempt status. Organizations are also vulnerable to loss of their nonprofit status if they engage in too much unrelated business activity to the…
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Generative AI (GenAI) is a self-replicating technology that generates summaries, classifications, and intelligence-as-a-service, effectively mimicking human creativity.
Correctly viewed, GenAI is a socio-technical system entangled in our social, organizational, and political practices.
To be successful with GenAI, nonprofit leaders must strategically guide their organizations to leverage this new technology while avoiding its inherent risks, all while remaining guided by ethics in service of the mission.
It is not uncommon for small to medium-sized nonprofits to adopt GenAI in an unsupervised, laissez-faire manner. This blog post explores what to do after the "infection" is discovered.
Pros & cons of laissez-faire adoption
Pros
While conventional AI is designed to generate reliable goal-oriented responses to its environment, GenAI acts like a collaborator with its human partner. The better a GenAI user becomes at framing prompt questions, providing context, and evaluating responses, the higher-quality results GenAI can produce, including sentiment analysis, pattern recognition, predictive analysis, and personalization.
Cons
The unsupervised use of GenAI exposes the organization and its clients to risks such as the systematic exclusion of people on the margins of society, exposure of personally identifiable information, devaluation of…
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Every nonprofit leader serving vulnerable populations has faced this dilemma: your organization needs funding to survive, but the most "effective" fundraising appeals often feel exploitative. The traditional approach tells us that donors need to see people at their absolute lowest point to open their wallets. But what if this assumption is wrong?
Research shows that storytelling that respects dignity produces better long-term results than sensationalized narratives. The Orangewood Foundation, for example, saw a 74% revenue increase after they stopped using exploitative stories. This contradicts the widespread belief that effective fundraising requires reducing beneficiaries to one-dimensional victims.
The representation paradox
Nonprofits serving stigmatized populations face what researchers call a "representation paradox." Organizations must show that beneficiaries need help while also acknowledging their agency and capability. They have to avoid "poverty porn" while still connecting emotionally with donors. This gets especially complicated for organizations working with people experiencing homelessness, domestic violence, mental health challenges, or other crises where harmful stereotypes already exist.
The problem goes beyond just raising money. How nonprofits talk about vulnerable populations shapes public perceptions and policy decisions. When organizations use narratives of…
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During interviews with Kitsap Food Coalition members, executives were asked if they advocate for their nonprofits. One stated his board requested participation in advocacy programs, allocating operating funds, but have not developed specific goals or a timeline. Another expressed trepidation stating, “I don’t know what I can and cannot say as an advocate.” He lacked knowledge of what advocacy is and when a 501(c)(3) is overstepping boundaries set by the IRS, especially with lobbying. Many organizations choose not to advocate for their mission because they fear retribution by government officials and foundations who do not agree with the nonprofit’s stance on an issue. These are common issues for nonprofits which can be remedied by a better understanding of what advocacy is, the benefits of coalition membership, and IRS charity guidelines.
Nonprofits use advocacy programs to amplify their mission and make a lasting impact in their community. Joining forces as one voice empowers nonprofits with similar clientele to better convey their constituents needs to community members and politicians, helping to ignite support both financially and in-kind including volunteering.
To gain clarity, nonprofits should understand that the IRS tax code does allow for advocacy including lobbying. The last two clauses in the 501(c)(3) charity tax code state that nonprofits can engage in an unspecified amount of lobbying but cannot…
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If there is one thing the nonprofit sector has taught me over the years, it's that change is constant. Funding landscapes shift. Community needs evolve. Technology advances. Economic uncertainty creates new challenges for the organizations and causes we care about most.
In times like these, it can be tempting to put professional development on hold. Budgets tighten. Calendars fill up. We tell ourselves we'll invest in learning, networking, or leadership growth "when things settle down."
The reality is that investing in yourself is most important when things are uncertain.
Professional development is not a luxury. It is a necessity. It helps us stay current, think strategically, adapt to change, and lead with confidence. The skills that got us here are not always the skills that will take us where we need to go next. Whether you're a seasoned executive, a frontline fundraiser, a nonprofit leader, or someone just beginning your career, continuous learning is one of the most valuable investments you can make.
But professional development is about much more than attending a session or earning a certification.
It is about community.
One of the greatest strengths of Arizona's nonprofit sector is the incredible network of professionals who show up every day committed to making our communities stronger. In a profession centered on relationships, we often forget that we need relationships, too. We need…
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