[BC] LPFM Operations

[Black, Mike]

I disagree. A non-commercial station, including LPFM, can not sell block
time. If they get paid to air a program or sell the block, for a
"donation", and a program is aired as a requirement for that donation,
then this comes into play with the FCC consideration rules and is
prohibited. There is a big difference between selling blocks of air time
and acknowledging a donation by a business in a short message that meets
legal requirements. Take a look at the Commission's website on the
nature of non-commercial operation. 
The Commission has allowed underwriting acknowledgements to identify a
business donor as long as it is not promotional, gives price, or is
comparative, and is not long in time or gets too wordy. While there is
some latitude, if it sounds like a commercial, it will garner attention
from either a commercial station in town or the Commission. Take a look
at some of the Commission releases on fines and citations, and you will
see that there is a pretty fine line when it comes to underwriting. 

As for the UBIT tax, You are correct. This comes into play if a
non-profit airs a commercial on a non-commercial station. They can
legally do this, but it causes some issues for both the station and the
non-profit, and to be honest, causes some confusion with your efforts
for underwriting support, when a business hears a commercial, but then
you have to tell him you can't say something similar about your
business.

Mike Black
WEOS
Geneva, NY
 

-----Original Message-----
From: broadcast-bounces at radiolists.net
[mailto:broadcast-bounces at radiolists.net] On Behalf Of wpio fm radio
Sent: Wednesday, September 06, 2006 4:06 PM
To: Broadcasters' Mailing List
Subject: Re: [BC] LPFM Operations

Bailey, Scott wrote:
> Can an LPFM (which is, by definition, noncommercial) sell airtime like
> that?

Yes Yes Yes it can.

Revenue is ok from any source: general support, specific 
program that is ongoing with or without the donation, and 
even the selling of a block of time.  That block of time 
must serve a nonprofit, noncommercial cause, of course.

The restriction lies in what happens to the proceeds (fund 
balance).  In a "for profit" entity, this is called owner's 
equity.

And it is the IRS, more so than the FCC that enforces this. 
  Interestingly, nonprofits that are not broadcasters who 
sell advertising, for example in a newsletter, must adhere 
to the exact same underwriter guidelines as the FCC requires 
for broadcast.

If they don't, it becomes UBI (unrelated business income) 
and is taxable)

Legitimate concerns over this thread should focus on what 
the nonprofit entity does with the proceeds not how it was 
contributed.

Nonprofits are not permitted to pay celebrity type wages to 
officers or directors.  This would equate to operating for 
profit.  They lose their 501(c)(3) designation for that. 
Remember it happened with United Way a few years ago.  The 
CEO's salary was as though he were working for a for profit 
entity.

You can look at the top salaries of every 501(c)(3) org at 
guidestar.org

But relax about if airtime was either sold or contributed 
toward.  Doesn't matter if or how much.

Randy Henry