What would be the financial consequences to the YMCA if it l

What would be the financial consequences to the YMCA if it lost its nonprofit status? What line items on the consolidated statement of activities would be impacted if the YMCA lost its nonprofit status? What changes would the YMCA need to make to its revenue structure if it lost tax-exempt status? What expenses would increase and require revenue sources to pay? What steps are required for the YMCA to maintain its tax-exempt status?

Solution

Financial consequences:

YMCA is the nation’s largest charity in terms of earned income, 2^nd largest by contributed income. Hence if it loses its nonprofit status, the income by means of charity & contribution will reduce & obviously it will have to pay more taxes like

Change of revenue:

The line of UBI (unrelated business income) becomes complicated. It means that the organization won’t receive income from regularly carried on trade or business that is related to the mission. If funds are generated from a business activity that is not regular, then taxes need to be paid on these incomes.

Expenses:

Sources to meet all these expenses would come from company’s profit, its capital etc.

Steps to maintain non exempt status: