Rental of facilities for weddings probably generates unrelated business
income. Rental income is exempt from Unrelated Business Income Tax (UBIT)
unless the rental includes services (such as set-up, or maid service, or
catering).  If it includes such services, it may be taxable income.

(In order to be taxable, income must be from a business, the business
must be "regularly carried on," and it must be unrelated to mission.
Even if it meets these tests, income may still escape UBIT if the
activity is principally carried on by volunteers.)

Many museum professionals believe that as long as they keep the galleries
open and perhaps provide docents, the rental is mission-related (and
therefore exempt from UBIT).  Based on various recent pronouncements, I
think that this line would not find much favor at the IRS.  IRS would
probably say, look, a party is a party is a party, the attendees are there
for the party, and the fact that incidentally they also get some
educational experience is not really relevant.  These pronouncements
applied only to individual institutions, but they are a fair indication
of what to expect if the IRS looks at *you.*

Andy Finch
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AAM Government Affairs

usual disclaimers apply