The Soapbox and Toolbox for New York State's Nonprofits

March 30, 2016

How to disclose the "charitable" portion of an event ticket purchase

Question:  We gave a fundraising concert at a patron's home. We charged $250 for a ticket, and everything was donated except the cost of the performers. Can we tell people their entire contribution was tax-deductible?

Short Answer: No. You can give event-goers a receipt, with a statement like: “Musical entertainment with a value of $50 was provided in return for this contribution.”


The Details…

Here’s the overview of the different jurisdictional laws:

Federal

First, nonprofits are not required to give donors receipts for normal donations,

but are for most quid pro quo contributions. The Internal Revenue Code precludes the IRS from recognizing a taxpayer’s claimed deduction for any charitable contributions exceeding $250, if unaccompanied by a “contemporaneous written acknowledgment (CWA) of the contribution by the donee organization” [26 U.S.C. 170(f)(8)(A)].

A CWA is sufficient if it is obtained from the nonprofit prior to the taxpayer’s filing date and describes:

  1. The name of the organization
  2. The amount of money contributed, and description (but not the value) of any non-cash contribution.    
  3. A statement that no goods or services were provided by the organization in return for the contribution. Or if there were (other than ‘intangible religious benefits’), a description and good faith estimate of the value of goods or services provided in return for the contribution.

Note that:
“The charity must furnish the statement in connection with either the solicitation or the receipt of the quid pro quo contribution.  If the disclosure statement is furnished in connection with a particular solicitation, it is not necessary for the organization to provide another statement when it actually receives the contribution.” 

So it’s not a problem to make the disclosure/quantification on a receipt after the event.  

 

 Here are some other general receipt discussions:



New York
Hopefully, as a nonprofit in NYS, you are registered with the NYS Charities Bureau…because it’s illegal to solicit contributions when you’re not [NY Exec Law § 172-d.].

Your solicitations to the event in NY are supposed to carry this notice (many nonprofits do not do this, however.)   Also FYI, here’s a bill pending to prevent profit-making off of any post-sale charitable event tickets:  The notice in the invite “must be placed conspicuously in the material with  print  no smaller than ten point bold face type”.  Here’s part of this NY section on solicitation.   §  174-b

Solicitation.  1. Any solicitation, by any means, including but not limited to oral solicitation, by or on behalf  of  a  registered charitable

 

organization

  which  is  required  to file financial reports

  pursuant to this article and has filed all such reports,  shall  include

  therein  a  statement  that  upon  request, a person may obtain from the

  organization or from the attorney general, a copy of the last  financial

  report  filed  by  the  organization  with  the  attorney  general. Such statement

shall specify the address of the organization and the  address

  of  the  attorney general, to which such request should be addressed and

  in the case of a written solicitation, must be placed  conspicuously  in

  the  material  with  print  no smaller than ten point bold face type or,

  alternatively, no smaller than the size print used for the  most  number

  of  words  in the statements. Provided, however, such statement need not

  be made where the space for a printed advertisement or promotional  time

  in  any  media  has  been  donated  or  made available to the charitable

  organization at no cost and such  space  or  time  does  not  reasonably

  permit inclusion of such statement.

    2.   Any   solicitation  used  by  or  on  behalf  of  any  charitable organization

shall provide a  clear  description  of  the  programs  and

  activities  for  which  it has requested and has expended or will expend

  contributions or shall include therein a statement that, upon request, a

  person may obtain from the  organization  such  a  description.  If  the

  solicitation  is  by  an  institution  subject  to article five-A of the

  not-for-profit corporation law,  and  is  for  an  endowment  fund,  the

  solicitation  must include a statement that, unless otherwise restricted

  by the gift instrument pursuant to paragraph (b) of section five hundred

  fifty-three of the not-for-profit corporation law, the  institution  may

  expend  so  much  of  an  endowment  fund  as  it  deems  prudent  after

  considering the factors set forth  in  paragraph  (a)  of  section  five

  hundred fifty-three of the not-for-profit corporation law.

    3.   In  addition  to  any  other  disclosure  required  by  law,  any

  solicitation by any means by a professional fund raiser or  professional

  solicitor  on  behalf  of  a  charitable  organization  required  to  be

  registered pursuant to this  article  shall  clearly  and  unambiguously

  disclose:

    (a)  the  name  of  the  professional 

fund raiser as on file with the attorney general and that the  solicitation  is  being  conducted  by  a

  professional fund raiser

  (b)  the name of the individual professional solicitor as on file with

  the attorney general and that the individual is  receiving  compensation

  for conducting the solicitation.

 

NYS doesn’t appear to have a preference on timing of quid pro quo disclosures. However, this is because you won’t have to list the quid pro quo ratios in the event solicitation…UNLESS using a professional fund raiser for that transaction:

 NY Exec Law   § 174-c. Sales advertised  to  benefit a charitable organization.

all advertising, of every kind and nature, that a sale of  goods,  services, entertainment  or  any  other  thing  of value will benefit a

charitable organization shall set forth the anticipated portion of the sales price, anticipated percentage of the gross proceeds,

anticipated dollar  amount per   purchase,   or  other  consideration  or  benefit  the  charitable organization

is to receive.  Provided,  however,  that  advertising  for sales  by  a charitable organization that has not used the services of a professional

fund raiseor commercial co-venturer in any  way  for  the sale shall not be subject to the requirement of this section.

 For instance, you as an employee, won’t be a prof.

fund raiser:

  4.  "Professional fund raiser." Any person who directly or indirectly,

  by contract, including but not limited to sub-contract, letter or  other

 agreement  or  other  engagement on any basis, for compensation or other

  consideration (a) plans, manages, conducts, carries on,  or  assists  in

  connection  with  a  charitable solicitation or who employs or otherwise

  engages on any basis another person to  solicit  from  persons  in  this

  state  for  or  on  behalf  of  any charitable organization or any other

  person, or who engages in the business  of,  or  holds  himself  out  to

  persons  in  this  state  as  independently  engaged  in the business of

  soliciting for such purpose; (b) solicits  on  behalf  of  a  charitable

  organization  or  any  other  person;  or  (c)  who  advertises that the

  purchase or use of goods, services, entertainment or any other thing  of

  value  will  benefit  a  charitable organization but is not a commercial

  co-venturer. A  bona  fide  director,  trustee,  officer,  volunteer  or

  employee  of a charitable organization or fund raising counsel shall not

  be deemed a professional fund raiser.

 

But your soliciting the event will be advertising:

10.  "Solicit."  To  directly  or  indirectly  make  a  request  for a

  contribution,  whether  express  or  implied,  through  any  medium.   A

  "solicitation"  shall  be  deemed  to  have taken place whether or not a

  contribution is made. For purposes of this article, a "solicitation"  or

  a   "solicitation  of  contributions"  includes  any  advertising  which

  represents that the purchase or use of goods, services, entertainment or

  any other  thing  of  value  will  benefit  a  charitable  organization.

 

 

 

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