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About Harvey Mechanic
Expertise
US Federal tax issues of nonprofit 501(c)(3) public charities only. Establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. To search my previous answers you can do a Google search:
site:allexperts.com/q/nonprofit
[with your other search terms appended].

Experience
I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar.

Education/Credentials
B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude

You are here: Experts > Real Estate > Tax Planning: U.S. > Nonprofit Law > Contribution required to receive a benefit

Nonprofit Law - Contribution required to receive a benefit

Expert: Harvey Mechanic - 10/22/2009

Question
My child attends a private, religiously-affiliated school which is part of a church. The school charges an "in-parish" and "out-of-parish" tuition rate. To receive the "in-parish" rate, families are "asked" to tithe to the church, and are "asked" to contribute at least $15 per week or $780 per year. Parents NOT contributing at this minimum level will be assessed quarterly and the tuition will be adjusted to reflect the "out-of-parish" rate retroactive to the month where the delinquency began. Since there is a direct benefit, i.e., a tuition discount, to the family, can the contribution to the church be considered a "donation" and be considered tax-deductible?

Answer
No, such payments are not at all deductible as donations.
See
www.irs.gov/pub/irs-tege/eotopice96.pdf
"Conduit Organizations - Charitable Deductibility And Exemption
Issues"
which has examples of donations to schools that might be not
deductible as they appear to be tuition payments, which are
similar to your situation as the taxpayer has a child who is a
beneficiary of the 501(c)(3) organization. Especially note on
page 2

---Start of Excerpt--
In Situation 4, a society for religious instruction operates a
school providing both secular and religious instruction for which
it charges no tuition. The school is funded through the society's
general account. However, a significant amount of funds come to
the society from parents on a regular established schedule. The
school treasurer also solicits contributions from parents
according to their financial ability. Parents are not entitled to
a charitable contribution deduction to the society because the
school is economically dependent on the parents' payments,
contributions are made on an established schedule, and the
treasurer's pressure for contributions indicates that
contributions are not voluntary.
---End of Excerpt--
---Start of Excerpt--
However, solicitation for contributions from parents of
applicants are made during enrollment of students or while the
application is pending, and children of parents who do not make
or pledge a "contribution" in the specified amount are not
accepted. In Situation 3, the organization admits or readmits a
significantly larger percentage of applicants whose parents made
contributions than applicants whose parents have not made
contributions.
---End of Excerpt--

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

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