Nonprofit Capital Markets

On my wish list for "topics for PCMI to rassle with" over the next few years is the idea of new forms of capital markets for nonprofits. My enthusiasm is based only on slight reading and slight familiarity with the capital structures of some for-profit corporations (leftovers from an old paralegal career), but this blog post in the Stanford Social Innovation review awoke the topic for me. Columns or blog posts based on the world of the future often cause my eyes to glaze over (and trigger a memory-loop of Conan O'Brien's old "In the year 2000" sketch), but yes, I do want google finance's experiment with nonprofits to get bigger. See also this Slate article, which specifically calls on Pew to take the lead in this initiative. or even this Slate article. Sounds like I need to call Douglas K. Smith.

Fear of Taxes

This article from the Chronicle of Philanthropy talks about the small amount of taxes paid by non-profits for their unrelated (taxable) revenue operations. Short version: there are lots of ways to make profits unprofitable in the tax code.

It reminds me of a presentation I went to a few years ago about earned revenue opportunities for nonprofits, where a predictable debate over museum shops broke out--what merchandise was related to the organization's mission & what wasn't, etc. The IRS used to use museum shops as an example in their publications on the subject. When faced with a brace of questions about whether one kind of shop could sell a certain kind of product vs. another kind of shop & another kind of product, the presenter just threw up her hands and said, "Hey, worst case scenario, you pay tax. It's not a big deal. Businesses do it all the time." It reminded me that we often needlessly twist ourselves into all different kinds of shapes trying to avoid lines of business that might be subject to tax, when we can just build it into the model...