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Nonprofit Law/501(c)(3) Donations

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Question
We are receiving donations for our 501(c)(3) fundraiser.  When money is donated we send them a receipt thanking them for the donation, along with the words "No goods or services were received in return for this gift".

The other day a local vendor asked if he could help out in the fundraising and offer to donate a t-shirt to people who donate $25 or more.  He thought this could help generate more interest and excitement.

If you do such a thing, would be be in violation of the "No goods or services were received in return for this gift" intent?
Thanks,
Dennis

Answer
See http://www.irs.gov/pub/irs-pdf/p1771.pdf which is the  IRS Publication "Charitable Contributions --
Substantiation and Disclosure Requirements" on pdf page 5:
--- Start of excerpt ---
Token Exception — Insubstantial goods or services a charitable organization provides in
exchange for contributions do not have to be described in the acknowledgment.

Good and services are considered to be insubstantial if the payment occurs in the context
of a fund-raising campaign in which a charitable organization informs the donor of the
amount of the contribution that is a deductible contribution, and:

1. the fair market value of the benefits received does not exceed the lesser of 2 percent of
the payment or $106,* or

2. the payment is at least $53,* the only items provided bear the organization’s name or
logo (for example, calendars, mug or posters), and the cost of these items is within the
limit for “low-cost articles,” which is $10.60.*
-- End of excerpt ---

Therefore, if the t-shirts had the organization's name prominently displayed you could still use the "No good or services were received in return for this gift" if the cost of the t-shirt is $10.60 or below as long as you require a donation of $54 or more to get the t-shirt

Harvey Mechanic
Attorney at Law
Harvey108@hotmail.com

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. For me to consider your individual situation and how the law applies, I would need to gather more information.

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Harvey Mechanic

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I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about 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 possible 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. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at Harvey108@hotmail.com I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.

Education/Credentials

B.S. Columbia University in New York City, 1970

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


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