Tax Tips Logo ImageISSUE

In these interesting times of “social distancing,” is it possible to host a fundraising event for donors and stakeholders of your institution?

 

SITUATION

Marathon Bible College (MBC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii).  They are required to file Form 990 annually.

The Team at MBC is planning a “Virtual Fundraising Banquet.”  They sent us the following outline of their plan:

  • Tables (5) sold at $2,000 each (sponsorships)
  • Home Chef, Blue Apron meals sent to homes of attendees prior to the banquet
  • 8 people per table (Small group, “Zoom Rooms” to start)
    • Table leader
    • Ice breaker / Questions
  • Overall Session (Zoom-type video gathering – after 50 minutes at “tables”)
    • A Student (from her backyard at home) will give an update regarding on-line coursework
    • A Professor will give a video talk focusing upon “Challenges and Victories”
    • MBC’s President will provide statistics, encouragement for all, and share fundraising needs – Now, and 2-3 years in the future

 

RULES

From the 2019 Form 990 instructions, Glossary:

Fundraising activities.  Activities undertaken to induce potential donors to contribute money, securities, services, materials, facilities, other assets, or time. They include publicizing and conducting fundraising campaigns; maintaining donor mailing lists; conducting fundraising events, preparing and distributing fundraising manuals, instructions, and other materials; professional fundraising services; and conducting other activities involved with soliciting contributions from individuals, foundations, governments, and others. Fundraising activities don’t include gaming, the conduct of any trade or business that is regularly carried on, or activities substantially related to the accomplishment of the organization’s exempt purpose (other than by raising funds). 

Fundraising events. Include dinners and dances, door-to-door sales of merchandise, concerts, carnivals, sports events, auctions, casino nights (in which participants can play casino-style games but the only prizes or auction items provided to participants are noncash items that were donated to the organization), and similar events not regularly carried on that are conducted for the primary purpose of raising funds.

Fundraising events don’t include the following:

  • The conduct of a trade or business that is regularly carried on;
  • Activities substantially related to the accomplishment of the organization’s exempt purposes (other than by raising funds);
  • Solicitation campaigns that generate only contributions, which may involve gifts of goods or services from the organization of only nominal value, or sweepstakes, lotteries, or raffles in which the names of contributors or other respondents are entered in a drawing for prizes of only nominal value; and
  • Gaming

 

BOTTOM LINE

  • These are certainly interesting times with all of the “shut-downs” and “social distancing.”
  • Christian colleges need to be innovative – in a manner true to their Mission and Calling – in the way we deliver services and meet needs.
  • Have you considered brainstorming – or “Faithstorming” – with your team (likely via video conference) about creative ways to raise funds?
  • As you plan for Virtual Fundraising-type events, take a look at Schedule G (Form 990) and the instructions thereto.

 

Specific questions? Email Dave Moja

The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.

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