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  • 1.  FMV Question Related to Sponsored Events

    Posted 05-09-2023 01:04 PM
    We host a Keeper of the Dream event that is free and open to the public.  Sponsorships are secured for this and historically none of the benefits offered had FMV associated with them.  This year, the department added a VIP reception.  This event is technically not open to the public but it's open to a lot of people (i.e. sponsors and their guests, prospects for future years or other events, dignitaries, staff, scholarship awardees and their friends and family, past awardees and their friends and family) who paid nothing to attend the event.  I'm inclined to think that we would have to factor in FMV for this since it's a benefit the sponsors receive but wanted to confirm as there's some disagreement within the department.

    Is there any IRS guidance or language I could pass along that speaks to this situation?

    Thank you,
    Steph

    --
    Stephanie L. Pollock
    Associate Director of Advancement Operations
    Oakland University
    O: (248) 364-6115 | C: (586) 707-1462
    Aspire. Advance. Achieve. | The Campaign for Oakland University


  • 2.  RE: FMV Question Related to Sponsored Events

    Posted 05-09-2023 01:09 PM
    Yes, you must establish the fair market value for the VIP reception (what a willing buyer would pay a willing seller), and reduce the gift by that amount. See IRS Publications 526 and 1771.

    BTW, DAF and private foundation donors could not be invited to this event.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987






  • 3.  RE: FMV Question Related to Sponsored Events

    Posted 05-09-2023 01:26 PM

    The relevant language in IRS Publication 561 is "If you receive a benefit as a result of making a contribution to a qualified organization...."

     

    In this case, that means that, even though other people might be invited for other reasons, if a particular donor was invited because of their giving, the benefit represents a quid pro quo.

     

    There is also a presumption that, when a benefit is provided, no portion of a gift is deductible, so the burden would be on your organization to demonstrate that a particular donor was not invited because of their giving.  That's a pretty high lift if, for example, you invite all donors at a certain level, all donors to this program at a certain level, all local donors to the program at a certain level, etc.

     

    My US$0.02 worth; the usual disclaimers apply.

     

    Good luck!

     

    Alan

     

    Alan S. Hejnal    (he/him/his)

    Data Quality Manager

     

     






  • 4.  RE: FMV Question Related to Sponsored Events

    Posted 05-09-2023 02:42 PM
    Great, thank you!