Fundraising Rules and Regulations
OSE Compliance Steps
- True Fans page updated with statement: Contributions or gifts to Open Source Ecology are not deductible as charitable contributions for Federal income tax purposes.
Background
- Some organizations, to whom contributions are deductible, erroneously inform donors that their entire contribution is deductible, when a portion of the contribution is often not deductible.
- Organizations conducting fund-raising activities are required to comply with specific fund-raising disclosure requirements.
Nondeductible Contribution Safe Harbor Formats
In the case of a solicitation by mail, leaflet, or advertisement in a newspaper, magazine, or other print medium, (including web pages) the following four requirements must be met:
- The solicitation includes whichever of the following statements the organization deems appropriate: "Contributions or gifts to [name of organization] are not deductible as charitable contributions for Federal income tax purposes," "Contributions or gifts to [name of organization] are not tax deductible," or "Contributions or gifts to [name of organization] are not tax deductible as charitable contributions;"
- The statement is in at least the same size type as the primary message stated in the body of the letter, leaflet, or ad;
- The statement is included on the message side of any card or tear off section that the contributor returns with the contribution; and
- The statement is either the first sentence in a paragraph or itself constitutes a paragraph.
Quid Pro Quo Contributions
1. A quid pro quo contribution is a payment made by a donor that is partly a contribution and partly for goods or services provided to the donor by the charity.
2. Charities that receive a quid pro quo contribution in excess of $75, effective January 1, 1994 (IRC §6115) are required to provide a written disclosure/ acknowledgement statement that:
- A. Informs a donor that the amount of the contribution that is deductible for federal income tax purposes is limited to the excess of money (and the fair market value of property other than money) contributed by the donor over the value of goods or services provided by the organization,
- B. Provides a donor with a good-faith estimate of the fair market value of the goods or services,
3. In addition, the Omnibus Budget Reconciliation Act of 1993 (P.L. 103-66) established IRC §170(f)(8)(A), which requires donors to receive a written acknowledgment from organizations for any single contribution of $250 or more, regardless of whether the contribution is a quid pro quo contribution.
4. An organization must furnish a disclosure statement in connection with either the solicitation or the receipt of the quid pro quo contribution. The statement must be in writing and must be made in a manner that is likely to come to the attention of the donor.
- Example:A disclosure in small print within a larger document might not meet this requirement.
5.No disclosure statement is required if any of the following are true.
- A. where the goods or services given to a donor meet the "token exception," the "membership benefits exception," or the "intangible religious benefits exception."
- B. where there is no donative element involved in a particular transaction, such as in a typical museum gift shop sale
6. Payments made for tuition for an education leading to a recognized degree, travel services, or consumer goods are not considered intangible religious benefits.
7. The organization may use any reasonable methodology in estimating the value of goods and services, provided it applies the methodology in good faith. If the organization fails to apply the methodology in good faith, the organization is treated as not having met the requirements of IRC §6115. See Treasury Regulation §§ 1.170A-1 and 1.6115-1 for more information.