Which of the following is a potential taxable function for an association?

Income produced from non-dues sources of revenue is a potential taxable function for an association because this type of income can include activities that are unrelated to the association's primary exempt purpose. For example, if an association generates revenue through activities such as sponsorships, advertising, or unrelated business income (UBI), those earnings can be subject to taxation.

Associations often rely on membership dues and other sources of funds that align with their mission and objectives to maintain their nonprofit status. However, when income comes from activities outside of their core mission, such as selling merchandise or conducting seminars that are unrelated to their exempt purpose, it can lead to tax implications. This is critical for organizations to manage properly to avoid potential tax liabilities.

The other choices represent funding sources that are generally consistent with an association’s tax-exempt purpose. Membership renewal fees, for instance, are considered primary revenue sources related to member services and are not taxable. Government grants are typically aimed at supporting the association’s mission, and donations from members are also aligned with the association's charitable activities, often exempt from taxation as well.