EO royalty agreements with for-profits still of concern to IRS.

An official from the IRS Office of Chief Counsel for the Delaware-Maryland district offered advice on royalty agreements between exempt organizations and for-profit institutions at a conference on Jan 7, 1999. Most royalty agreements concern mailing lists rented from nonprofits to for-profits and arrangements under which for-profits can use the names and logos of nonprofits. Income generated for the nonprofits by such agreements can be unrelated business income. The IRS official advised nonprofits not to undertake administrative costs that should be undertaken by for-profits, and activities such as writing advertising copy and printing materials should be performed by for-profit organizations.