More than one million organizations are approved for tax-exempt status mainly because of their charitable and educational, social welfare, or member benefit purposes. The Internal Revenue Code allows exemption under 25 categories, including charities, labor unions, social clubs, and credit unions. Some, particularly larger tax-exempt groups, have relied upon service fees and businesslike activities to finance their operations. In 1950, the unrelated business income tax was introduced to address what was seen as competition between tax-exempt organizations and taxable businesses. This testimony discusses the activities of tax-exempt organizations, the revenue resulting from these activities, and the extent to which the revenue may be subject to the unrelated business income tax. GAO focuses on the activities of charitable and educational organizations and social welfare organizations.