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9 HB Fiscal Polices$Procedures <br /> • The amount of the gift <br /> • When the payment of the pledge is expected <br /> • Any restrictions on the use of the donation <br /> Unrelated Business Income Tax <br /> UBIT is tax on activities not related to the mission of a 501(c)(3) tax exempt organization. Under <br /> IRS publication 598 (Tax on Unrelated Business Income of Exempt Organizations), an organization <br /> is subject to UBIT if the activity meets all of the following three requirements: <br /> 1. Trade or business <br /> 2. Regularly conducted <br /> 3. Not substantially related <br /> Earned Revenue <br /> • Partnering Agency Contracts: HB provides supplemental programming through partnerships <br /> with local colleges and other educational institutions. This income comes in two ways: <br /> o HB proposes a scope of work and service fee for supplemental programming and <br /> contracts directly with a school. HB invoices schools for payment according to the <br /> contract terms. This earned revenue is unrestricted. <br /> o HB provides educational programming as a subcontractor for San Jose City College <br /> and other organizations on a reimbursement basis. Based on a proposed budget, <br /> both parties sign a reimbursement-based contract. HB submits invoices with <br /> detailed expense reports and records funds as Tuition Revenue in the accounting <br /> software. <br /> • Subtenants: HB acts as a sublandlord and subleases portions of its leased office space to <br /> subtenants. HB maintains a detailed sublease with each subtenant that covers all terms of <br /> the agreement. HB invoices its subtenants for rental fees on a monthly basis. This earned <br /> revenue is unrestricted and is recorded in the accounting software as Space Rental <br /> Income. <br /> • Fiscal Sponsorship: HB acts as a fiscal sponsor for certain projects that align with HB's <br /> mission. HB maintains a detailed Memorandum of Understanding (MOU) with each <br /> sponsored project covering all terms of its fiscal sponsorship of the project. in return for <br /> the services described in the MOU, HB retains a percentage of funds received by each <br /> project. This earned revenue is unrestricted and is recorded in the accounting software as <br /> Fiscal Sponsorship Fees. <br /> D. References <br /> Pledge A donor fills out and signs a form created for each campaign, or provides <br /> Form/Communication another form of written documentation, to communicate their pledge to give <br /> monetary support. <br /> E. Procedures <br /> Exec. Dir. of Staff Acct. Deputy Donor <br /> Dir. Finance Acct. Clerk Director Relations Asst. <br /> (D.B) Manager <br /> 1. Receive mail and distribute to Receives <br /> appropriate staff. checks X <br /> from Dev. <br /> Last updated September 2022 <br />