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  • 1.  IRS Ruling - No Deductions for Gifts to Subordinate Clubs

    Posted 10-08-2024 03:22 PM
      |   view attached
    Over the years, I learned that some colleges and universities accept donations to their social clubs as charitable gifts. They explain that since the club operates under the auspices of the 501c3 status of the "parent" organization, they can accept gifts.

    I have disagreed with those statements and shared the section of code from many years ago stating that gifts cannot be made to student clubs-including fraternities and sororities-unless the club serves a purely educational purpose.

    However, some continue to argue that they are "protected" by the school's 501c3 status.

    While researching something else today, I stumbled across the attached ruling from the IRS issued in 2011. The ruling clearly states that the 501c3 organizations' subordinate clubs do not qualify to receive charitable gifts because the club did not qualify as a 501c3 (serving educational purposes) on its own merit.

    I'm sharing the 2-page ruling with you should it help you with any ongoing disagreements on accepting gifts to student clubs.

    John

    John H. Taylor, Principal
    John H. Taylor Consulting, LLC
    2604 Sevier Street
    Durham, NC     27705

    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987


  • 2.  RE: IRS Ruling - No Deductions for Gifts to Subordinate Clubs

    Posted 10-09-2024 08:47 AM

    Interesting.

     

    I wish that we had more of the context.  I'm not sure what to make of "the subordinate clubs in your group ruling" but the language that the subordinate clubs are themselves 501(c)(4) organizations implies separate incorporation, which is not the case with most student organizations at educational institutions, in my experience.

     

    In fact, I am coming to doubt whether this has anything to do with educational institutions at all, and suspect that it comes from some sort of social organizations world where a national parent with a charitable purpose qualifies for a 501(c)(3) but its (local?) affiliate clubs have only 501(c)(4) status.

     

    In any cases, it remains true that, for student organizations that operate as part of an educational institution and not as separately-incorporated organizations, contributions to support those student organizations do not qualify as charitable contributions unless the clubs serve exclusively educational (not academic) purpose, under a relatively broad definition of "educational," and with the further proviso that neither limited membership nor the fact that the participants enjoy the activity and association are disqualifying.

     

    So, yes, support of purely social student organizations, at qualified educational institutions, that are not organized for exclusively educational purposes do not qualify as charitable contributions, but I am unconvinced for the moment that this letter adds to that analysis, or, really, that it even has student clubs and educational institutions as its subject!

     

    My US$0.02 worth; the usual disclaimers apply.

     

    Good luck!

    Alan

     

    Alan S. Hejnal (he/him)

    Data Quality Manager

     

    SNAGHTML5cbfa34

     






  • 3.  RE: IRS Ruling - No Deductions for Gifts to Subordinate Clubs

    Posted 10-10-2024 04:35 PM

    I shared about this topic and the 2011 IRS statement with our CEO.  He has asked if that is the most recent statement from the IRS.  Is that the case or is there a more recent resource?

    Thanks.



    ------------------------------
    JoAnn Strommen
    South Dakota Mines Center for Alumni Relations & Advancement (CARA)
    joann.strommen@sdsmt.edu
    ------------------------------



  • 4.  RE: IRS Ruling - No Deductions for Gifts to Subordinate Clubs

    Posted 10-10-2024 05:05 PM
      |   view attached
    You will need to contact the IRS.

    Typically they do not issue new statements unless something changes. When I have contacted the IRS on related matters I am referred to rulings from the 60's and 70's - even a few fro the 1950s.

    So, no, I have not seen anything more recent that changes their stance originally stated in the attached from many years ago.