The Nonprofit FAQ: Management: Regulation

Select an FAQ   (13):

Are donations always tax deductible? Not always. Even when the recipient is an organization recognized by the IRS under section 501(c)(3), the donor may not be able to deduct the gift from personal income taxes.

Can an organization that helps people with a specific disease qualify as a public charity? The answer is, 'it depends'. Gifts earmarked for specific individuals can't be tax-deductible.

Can I sell things for a profit and be tax-exempt? Selling items does not risk an organization's tax-exempt status if the revenue generated is used to promote the organization's exempt function and the applicable taxes are paid on any unrelated business income.

Does Fundraising on the Internet Require Registration in Every State? There is no final answer...yet. Several writers' have discussed the question online.

How can we streamline our charitable solicitations registration? The Unified Registration Statement (URS) is accepted by many states.

How is fundraising regulated in the US? State governments are the most active regulators of fund raising, and the standards are quite different from place to place. The use of the Internet for fund raising makes this situation even more complicated.

I want to start a campaign to raise money for a cause. What do I need to worry about? Besides finding the money, you mean? Well, there are actually several issues that you should consider before running your own fundraising campaign.

Is grantwriting a fundraising expense It depends how the resulting revenue will be treated.

Is IRS recognition necessary before we receive donations? Strictly speaking, no. But many larger donors require evidence of 501(c)(3) status and it offers reassurance to all.

Is it possible to raise money with $0 fundraising expense? Maybe. But the accounting rules make clear that it only happens in very special cases.

Should fundraising revenue be reported 'gross' or 'net'? 'Gross' is the right answer here.

What if we lose our determination letter from the IRS? There is a simple procedure for getting a replacement. (These letters are sometimes also called 'recognition' letters.)

What is 'substantiation'? Why should donors care? If you make a cash contribution of any size, you have to have 'substantiation' for the gift in order to deduct the gift from personal income taxes.