Unrelated Business Income (UBI) & Private Business Use (PBU)

Before entering into revenue generating agreements please review Financial Affairs Policy FA 157.

As a 501(c)(3) organization, Georgetown University is generally exempt from income tax.  However, under certain circumstances income it receives may generate an income tax liability.

Generally, if the income received meets all three of the following criteria, it constitutes Unrelated Business Income (UBI);

• It is income from trade or business
• Such trade or business is regularly carried on by the organization
• The conduct of such trade or business is not substantially related (other than through the production of funds) to the organization’s performance of its exempt functions

Items to note:

• There are exceptions and exclusions to unrelated business income.
• Sponsorship payments can generate UBI if not classified as an “Qualified Sponsorship Payment” as defined by the IRC.
• University Departments should always follow the Web Advertising and Sponsorship.
• Annually, the Tax Department distributes a Georgetown University Annual Tax Department Questionnaire to Main Campus, Medical Center, University Services and the Law Center. To assist with completing the survey, we provided a preparation sheet. If you have not already provided your department’s survey, please let us know.
• Please e-mail taxdepartment@georgetown.edu with questions.

The Tax Department reviews all revenue generating agreements for PBU. The Office of Sponsored Research (OSR Medical Center) and the Office of Research Services (ORS Main Campus) review all sponsored grants and contracts. These offices are responsible for making sure the location, including room number, where the services are primarily performed is accurate on each award. They are also responsible for entering the PBU determination on each award. The Sponsored Research Private Business Use (PBU) Analysis should be used as a guide to make these determinations.