Nonprofit radio station gets income from a commercially owned station?

November 1, 2018 11:57 PM

I know non profits can have for profits arms that provide some funding. That depends a lot on how much Unrelated Business Income the IRS is willing to tolerate.

If any nonprofit can have a for profit business, has there ever been a public radio station that owned a commercial radio station? The latter can have events and swag that bring in money. But what about owning a commercial station that advertises and brings in revenue which then feeds the nonprofit. Has that ever happened? Is it happening anywhere? If yes, why don't more stations do it?

posted by CollectiveMind to Media & Arts (3 answers total)

A non-profit could operate an ad-carrying top 40 station as long as they followed the tax code. A non-profit could also own assets and have a separate operating entity sending profits to the shareholders. I think it comes down to management why stations don't do it.
posted by parmanparman at 1:13 AM on November 2, 2018 [1 favorite]

It could be done depending on which chapter of the IRS code they operate and file under (generally 501(c), of which there are several subchapters of regulations like (3) for religious and educational orgs, or (7) which is used for ‘not-for-profit’ hospitals, and so on). I’m more familiar with the latter. Many not-for-profit hospitals have purely commercial arms (home health, pharmacy, real estate, DME suppliers, etc.). Some not-for-profit entities operate under the umbrella of a for profit corporation (e.g. for-profit C Corp. owns not-for-profit hospital and for profit C imaging, C ambulance service, C DME, and other out-pt. moneymakers.)

You need to consult a tax attorney; the area is complex and can change whenever Congress is in session.
posted by sudogeek at 9:49 AM on November 2, 2018

Well, a radio station can't own another radio station -- only individuals or incorporated entities own stations. I do know a couple of guys who own some radio stations; one is a public radio station, the rest are commercial. The commercial stations are owned by their incorporated company, the public station by their incorporated foundation. The previous owner had done the same thing. So based on that I'm thinking what you describe is probably not allowed, but I am no corporate or FCC attorney.
posted by JanetLand at 11:45 AM on November 2, 2018