Apple Plans to Stream Children's Shows From Sesame Workshop [telecom]

Dare I ask the question that ... with all these business deals, just why is Sesame Workshop still holding onto tax exempt status?

It's fairly easy to be a not-for-profit corporation: it's a matter of structure, not line of business. There are many non-profits which are quite enormous businesses (the American Red Cross and many health insurers, for example). All non-profits must file an annual tax return on IRS form 990, but providing they meet the structural requirements, they are exempt from taxation. This category includes far more than just charities: there are labor unions, chambers of commerce, certain kinds of mutual insurance companies, political parties, political action committees, and so on. (The principal structural requirement is not having owners or beneficiaries who are entitled to a share in the assets of the corporation should it be dissolved.)

It's only somewhat more difficult to be a charity, which is what allows *donors* to claim a tax deduction. A charity has to have a specific charitable purpose, but those can include providing health care services, supporting the development of free software, or operating nationwide religious radio networks. Charities are somewhat limited in how much they can directly earn from "unrelated business activities", so a large charity -- like a university, for example -- may place some of its operations in a taxable subsidiary, and then receive the profits as dividends after paying tax; this is treated as an investment.

-GAWollman (IANAL,TINLA)