Nonprofit Law/Donor made the check out to the DBA
Back in 2010 you answered the following question (see below). Could you please clarify that even though the donor made the check out to the DBA … it could still be recognized as tax exempt from the parent organization? I am in fiscal sponsorship situation awaiting re-instatement from the IRS but have donations made out to my organization. Just need to confirm that if the fiscal sponsor claims all of my accounting in their 990 it would be permissible for them to write the acknowledgement receipts to my donors.
thanks so much,
I have set up a D.B.A. for a special project under a tax exempt 503(c)3 Nonprofit religious organization. Can I accept donations as tax deductible to the D.B.A.? If yes do I issue receipts in the name of the D.B.A. or in the name of the parent organization? Please explain.
I am assuming that the 501(c)(3) organization is a corporation. That corporation would be issuing the acknowledgements (receipts) to donors and the proper way would be for them to use the same name that they are recognized by the IRS as an exempt organization. If that corporation wants to dispute you to issue the acknowledgements, that is up to their officers or board.
You may be interested in the the IRS Publication "Charitable Donations --- Substantiation
and Disclosure Requirements"
Thank you for asking.
Harvey Mechanic, Attorney at Law -
I don't believe that I can clarify as to the answer I gave in 2010 in response to that particular question back in 2010. I can only repeat the answer that I gave in 2010, as the law has not changed in this area.
However, now you are presenting something with additional facts and I can address your specific situation. First, though, I would like to correct your use of "parent organization". When a organization registers a dba there is only one organization, which may now use two different names. There is no "parent" and no "subsidiary", only one organization.
Generally, if a donor makes a check out to an exempt organization with the expressed wish that funds go to a particular project of that exempt organization, the donation is deductible by the donor, whether the name on the check is the original name of the organization or a dba of that organization. Further, in the the IRS Publication "Charitable Donations --- Substantiation and Disclosure Requirements" which I had linked to in my 2010 answer, we see on page 4:
--- Start of Excerpt ---
A donor cannot claim a tax deduction for any contribution
of cash, a check or other monetary gift unless the donor
maintains a record of the contribution in the form of either a
bank record (such as a cancelled check) or a written commu-
nication from the charity (such as a receipt or letter) showing
the name of the charity, the date of the contribution, and the
amount of the contribution.
--- End of Excerpt ---
Obviously, if the donor is audited for the tax year in which she gave the donation, she would want evidence that the IRS would recognize the donation as to an exempt organization. Now if the donor's check has been made out to what appears to be an organization that has had its exemption revoked, the donor can not take a deduction. Therefore, if the dba has a name that is similar to the organization that had its exemption revoked, there may be a lot of confusion here. Let me know about those and after you give me that information I will reply further. Please also confirm that the check from the donors are going into a bank account with the same EIN (Employer Identification Number - or Taxpayer Id number) that is listed with the IRS for the exempt organization that is currently considered exempt.
Harvey Mechanic, Attorney at Law -
P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.