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  • 1.  Qualified Charitable Sponsorship Benefits - Ability to Rent a Space

    Posted 03-05-2024 11:11 AM

    Greetings, community!

    I am currently at a loss for trying to explain and provide backup documentation for a sponsorship prospectus that a department has put together. One of the benefits listed is the "ability to host a private event" in the building. There is a caveat that they are responsible for all costs, including catering and staffing. I let them know that the use of the space is a tangible benefit that must be disclosed. 
    The organizers have pivoted to say that the benefit is the ability to rent the space in an attempt to not have to disclose the benefit. In this particular case, the space is not available to rent to the general public, which I believe makes it a benefit that must be disclosed. Does anyone have examples that I can point back to? The only real example that I have is the right to purchase seats at athletic events, but that has a very specific call out in the tax code.
    I appreciate any help!


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    Mandy Smith
    Virginia Commonwealth University
    mlsmith4@vcu.edu
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  • 2.  RE: Qualified Charitable Sponsorship Benefits - Ability to Rent a Space

    Posted 03-05-2024 11:23 AM
    One of my clients estimated the rental cost based on a similar-sized space/facility in the community. Care must also be taken to consider custodial, security, and parking fees.

    You are correct that this is a tangible benefit. The IRS requires you to "make a good faith effort" to estimate the benefit's fair market value. I believe the course of action my client took was reasonable.

    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






  • 3.  RE: Qualified Charitable Sponsorship Benefits - Ability to Rent a Space

    Posted 03-05-2024 05:17 PM

    Thanks, John. The discussion has morphed away from the benefit being the space into the benefit is the right to rent the space. So they would still need to pay whatever rental amount.



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    Mandy Smith
    Virginia Commonwealth University
    mlsmith4@vcu.edu
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  • 4.  RE: Qualified Charitable Sponsorship Benefits - Ability to Rent a Space

    Posted 03-05-2024 05:30 PM
    And that, in itself, can raise other issues including unrelated business income.

    John

    John H. Taylor 
    919.816.5903 (Cell/Text)

    Big Ideas; Small Keyboard