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  • 1.  Incentives to donate from a third party

    Posted 09-04-2024 05:32 PM

    What are the ramifications if a third party offers incentives, some insubstantial, some substantial, for donations to a non-profit?  Those giving by a certain date regardless of amount, entered in drawing for various prizes. 

    To the best of my knowledge, the organization does not know this is happening.  What if non-profit does not know these incentives are being given? What if they know?

    If the third party offers to do same for our upcoming annual campaign, where can I find guidance to respond? I know this is on the line of becoming gaming and affecting charitable contribution amount which matters for some.



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    JoAnn Strommen
    South Dakota Mines Center for Alumni Relations & Advancement (CARA)
    joann.strommen@sdsmt.edu
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  • 2.  RE: Incentives to donate from a third party

    Posted 09-04-2024 05:56 PM
    The IRS regulations as described in Publications 526 and 1771 (and other rulings) apply to all benefits given to donors regardless of the source. Those benefits must be treated as a quid pro quo.

    This is not that different from a donor underwriting an event. While the event may not cost the non-profit anything, the donor is still receiving a benefit that must be calculated at its FMV.

    If you have third parties going rogue, you likely need a Third-Party Fundraising policy prohibiting any activity like this without an application and your approval.

    John



    Original Message


  • 3.  RE: Incentives to donate from a third party

    Posted 09-05-2024 10:51 AM
    If the nonprofit knows, it's as per John's emails. If they don't know, they don't know. There isn't an obligation to research the issue unless there is good reason to suspect that a gift isn't truly a gift. If the nonprofit should have known, it could be liable. 

    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:




    Original Message


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