[Foundation-discuss] Rewarding sponsors with acknowledgement in source/logos on website?

[Dave Botsch]

While we will, of course, confirm things with a lawyer, first, from
everything I've been able to find in terms of case studies and guidance
from the IRS itself, we're ok.

Of course, if one ends up in court, then it comes down to the arguments
the lawyers make and the feelings of the judge.



On Fri, Nov 27, 2015 at 01:57:08PM -0500, Jeffrey Altman wrote:
> On 11/27/2015 12:45 PM, Dave Botsch wrote:
> > 
> >>
> >> The first one seems a bit problematic to me, unless there are at least a handful of such sponsors and there's some diversity among them.
> >>
> > 
> > I agree and disagree. It could potentially look bad if there's just one
> > or two. On the otherhand, it singles those one or two out and perhaps
> > sends a message to others. 
> > 
> 
> I am not a lawyer but the OpenAFS Foundation is a 501(c)3 and as such it
> must adhere to Federal laws governing charities.
> 
> As such, if the Foundation is giving something in exchange for a
> donation then it must be able to measure the value to the item being
> given and such item must be deemed to be of "insubstantial value".
> Otherwise the transaction might be deemed an "excess benefit
> transaction" which can result in penalties for both parties.
> 
> If the Foundation is not treating the sponsorship as a charitable
> donation then the transaction is not tax exempt and might fall under the
> "unrelated business income" rules and limitations.
> 
> In addition, a 501(c)3 cannot be deemed to be benefiting any private
> entity.  As such a benefit given only to one entity even if offered to a
> broader set can be deemed impermissible.
> 
> Finally, a 501(c)3 (except for a private foundations) is required to
> demonstrate broad support from the general public.  As such it must be
> careful not to accept donations that will lead the IRS to conclude the
> organization is not representative of the general public.   The IRS
> regulations provide guidance on the percentages of donations that can be
> large versus small.
> 
> Sponsorships work well for organizations with a broad base of individual
> donations that balance the much larger corporate contribution. This is
> the reason that corporations and wealthy individual donors often offer a
> matching contribution up to a limit instead of a straight donation.  It
> permits the contributing entity to make the donation and obtain the
> public relations benefits of doing so without putting the charitable
> organization's tax exempt status at risk.  Of course, if the charitable
> organization is unable to solicit a sufficient number of small
> individual donations, it cannot access the money.
> 
> I suggest that the Foundation Board consult with a tax attorney
> specializing in 501c3 tax law before it proposes sponsorships or
> benefits (material or otherwise) in exchange for donations.
> 
> Jeffrey Altman
> 
> 

> begin:vcard
> fn:Jeffrey Altman
> n:Altman;Jeffrey
> org:AuriStor, Inc.
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> note;quoted-printable:LinkedIn: https://www.linkedin.com/in/jeffreyaltman=0D=0A=
> 	Skype: jeffrey.e.altman=0D=0A=
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> end:vcard
> 




-- 
********************************
David William Botsch
Programmer/Analyst
@CNFComputing
botsch@cnf.cornell.edu
********************************