American tax laws require advertising revenue exceeding $1,000 to be reported by non-profit ministries and churches. However, some organizations fail to report unrelated business income because of either not knowing the law or purposefully restructuring themselves to avoid disclosure.
In recent years some religious TV broadcasters have begun to distance themselves from the high pressure beg-a-thon fundraisers of the past and are adopting the new business model of Free Ad Supported Television (often identified by the acronym FAST.)
The Inspirational Network, a non-profit organization operating the INSP cable network, is the leader in this transformation, having generated hundreds of millions of dollars or more in advertising revenue that has been unreported since 2014 on its Form 990s.
The Inspirational Network was the recent subject of a Trinity Foundation investigation into unreported advertising revenue and excessive compensation.
Which raises the question, how do other religious non-profits report advertising?
In 2021, Christianity Today International reported almost $2.9 million in advertising revenue of which $637,199 was unrelated business revenue.
(Screenshot: Christianity Today International 2021 Form 990, page 9.)
Meanwhile, God’s World Publications (the publisher of World Magazine) reported all its advertising revenue ($1,543,326 for fiscal year ending June 30, 2021) as unrelated business income.
Financial Reporting
There are five different 990 forms of which four disclose unrelated business income.
990-N: Commonly referred to as the e-postcard, uniquely does not disclose unrelated business income. The others do. The 990-N is reserved for small non-profits which generate $50,000 or less of revenue.
990-EZ: For non-profits with gross receipts less than $200,000 and total assets less than $500,000.
990: For non-profit organizations with assets exceeding $500,000 or gross receipts of $200,000 or more.
990-PF: For non-profit organizations operating as private foundations (typically funded by a handful of people and not the public at large, an example would be the Bill & Melinda Gates Foundation).
While churches, synagogues and mosques are exempt from filing the 990-N, 990-EZ, 990, and 990-PF, they are required to file the 990-T if they generate more than $1,000 in unrelated business income.
Some exemptions apply. Debt-financed rental income is taxable. However, if a church or non-profit has paid off a property that it rents out, the income is NOT subject to unrelated business income tax.
IRS backlogs dating back to Covid-19 are delaying processing of 990-Ts. For most non-profits, the most recent 990-T to be available will be for the fiscal year 2019 practically preventing public accountability.
Religious Organizations Reporting Advertising Revenue
In 2019, Trinity Broadcasting Network (TBN) began reporting advertising revenue on the 990s of two of its non-profit organizations. In 2021, TBN’s former parent organization Trinity Christian Center of Santa Ana disclosed almost $11.5 million in advertising revenue.
Trinity Broadcasting of Texas, the new parent organization of TBN, reported only $159,579 in advertising revenue for 2021 which is a sharp drop from almost $4 million in ad revenue for 2020.
The Oral Roberts Evangelist Association operates the for-profit subsidiary Traco Advertising and discloses its revenue on the 990’s Schedule R which lists related organizations of the non-profit.
Sojourners, the non-profit publisher of Sojourners magazine, reported $340,623 in “online” advertising revenue for the fiscal year ending June 30, 2022.
Online advertising on religious non-profit websites should be expected to grow in the future. This trend may even include churches.
In 2020, Steven Furtick’s Elevation Church generated $304,737 in advertising revenue.
(Screenshot: 2020 Form 990-T for Elevation Church, page 5.)