Loans and Investor Proceeds

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Loans, other repayable assets, and investor proceeds are cash and in-kind resources which were not given or earned for services, but were loaned or which in some way must be repaid at a later date (through excused future membership dues, transaction fees, contract proceeds or other deferred payments), or which were received from investors in exchange for equity ownership of the organization.

Investor proceeds in exchange for equity are not available to 501(c)3 tax exempt organizations, in which equity ownership is not permissible under the federal tax code. However, nonprofit organizations may participate in for-profit enterprises which, subject to very specific and detailed limitations, may partner with investors.

(Variations in the way income is classified for a particular RHIO may depend on legal and accountancy advice, local and state statutes and regulations, form of incorporation and IRS determination. In general, information in this section relate to RHIOs organized under section 501(c)3.)

--Michael 15:36, 17 April 2006 (CDT)