What is the name of your state?What is the name of your state? ---Massachusetts
I have a bit of a complex situation to describe but I'll do my best.
I have a large for-profit summer camp for kids and we also have a non-profit 501(c)3 component. The non-profit component raises money for children who cannot afford the tuition of the camp. My question surrounds a method of fundraising that I came up with and would like to use.
We are trying to build a fundraising program whereby we have a list of imprinted items (frisbees, yo-yos, water bottles, etc.) that a sponsoring company can purchase through us and we will co-brand the items with their logo and our logo. A portion of the price would go to the cost of the item and the rest of the price is a direct donation to the fund. For example, if a company ordered 100 frisbees for $300, $150 would go towards the item purchase and the other $150 would go towards the fund. We would then distribute these items to all of the kids and the parents of the camp.
The grey area is that the way it is typically done is that a company would purchase an item, give it to the non-profit and then the non-profit would sell the item and make funds that way. Instead, I am suggesting that a company purchase the item for a price that includes a donation amount and that we simply hand out the item.
My questions are:
1. Can the sponsoring company write the check to our non-profit for the entire amount and write it off as a charitable deduction or would we need to break up the price into two amounts: one to the imprinting company for the items and one to our fund?
2. If the they have to break up their payment, could they purchase the items through us so that there is no sale tax, or would they have to purchase it outside of our program since it could be considered advertising and not a charitable deduction?
Even my accountant can't figure this one out, so I'm hoping someone out there on the web can give me a clear direction.
Thanks!
Marcus
I have a bit of a complex situation to describe but I'll do my best.
I have a large for-profit summer camp for kids and we also have a non-profit 501(c)3 component. The non-profit component raises money for children who cannot afford the tuition of the camp. My question surrounds a method of fundraising that I came up with and would like to use.
We are trying to build a fundraising program whereby we have a list of imprinted items (frisbees, yo-yos, water bottles, etc.) that a sponsoring company can purchase through us and we will co-brand the items with their logo and our logo. A portion of the price would go to the cost of the item and the rest of the price is a direct donation to the fund. For example, if a company ordered 100 frisbees for $300, $150 would go towards the item purchase and the other $150 would go towards the fund. We would then distribute these items to all of the kids and the parents of the camp.
The grey area is that the way it is typically done is that a company would purchase an item, give it to the non-profit and then the non-profit would sell the item and make funds that way. Instead, I am suggesting that a company purchase the item for a price that includes a donation amount and that we simply hand out the item.
My questions are:
1. Can the sponsoring company write the check to our non-profit for the entire amount and write it off as a charitable deduction or would we need to break up the price into two amounts: one to the imprinting company for the items and one to our fund?
2. If the they have to break up their payment, could they purchase the items through us so that there is no sale tax, or would they have to purchase it outside of our program since it could be considered advertising and not a charitable deduction?
Even my accountant can't figure this one out, so I'm hoping someone out there on the web can give me a clear direction.
Thanks!
Marcus