Monday, February 10, 2014
A Minneapolis news station received emails from viewers during last week’s Super Bowl asking, “What does it take to be a nonprofit?” The emails came from those viewers curious about the NFL’s nonprofit status.
The station’s response article quotes several people who each shed some insight on the characteristics and justifications of nonprofit organizations.
Jay Kiewdrowski, a nonprofit management teacher, explains “a nonprofit is an organization that exists to accomplish a mission that’s community oriented…They’re not in existence to make money, they’re not owned by shareholders, there are no shareholders.” Michaela Charleston of the Minnesota Council of Nonprofits is quoted stating nonprofits “provide people with services and assistance that are unmet by government and for-profit sectors.”
The article also quotes attorney for the NFL, Jeremy Spector, who explains that the tax-exempt status only applies to the NFL league office, not the “NFL that fans think of every Sunday.”
The NFL league office is funded by fees from all 32 NFL teams and is responsible for writing the rules of the game, scheduling games, negotiating collective bargaining agreements, hiring referees, and more. Spector also explains the NFL league office “does not receive income from game tickets, television contracts and the like.”
The article provides the IRS rule for tax-exempt business leagues like the NFL: “To be exempt, a business league’s activities must be devoted to improving business conditions of one or more lines of business as distinguished from performing particular services for individual persons.”
What justifications or theories of tax-exemption do Kiewdrwoski and Charleston advance? Are these theories consistent with Spector’s explanation of the role of the NFL league office and the IRS rule for tax-exempt business leagues?