The Standards for Excellence: An Ethics and Accountability Code for the Nonprofit Sector states that all nonprofits “must be aware of and comply with all applicable federal, state, and local laws.” Of course, nonprofit disclosure laws are among the important laws with which all nonprofits should comply. Each year, we update Disclose It!: A Charitable Nonprofit’s Guide to Disclosure Requirements to keep members of the Standards for Excellence community up-to-date on this important area in nonprofit management. Main updates include:
- The latest numbers for the value of a low cost article and insubstantial benefits provided by the IRS
- Updates to weblinks in the resources section
In addition to information on federal nonprofit disclosure requirements, this indispensable resource includes information about registration disclosure for charitable solicitation in every state that has their own additional requirements.
Here’s an excerpt from Disclose It to give you a sneak peak!
Disclose To Donors How Much Of Their Contributions Are Deductible
Does your organization hold a special event where dinner or entertainment is provided? Do you give contributors a subscription to a magazine or promotional merchandise (a mug, book, etc.)? Do you provide donors with membership benefits in return for a contribution? If so, your organization needs to be familiar with the IRS rules that apply when donors receive something in exchange for their contribution. You should know the following:
- The IRS presumes that donations are not tax-deductible — The IRS requires taxpayers to prove that the amount they pay exceeds the fair market value of the food, entertainment, merchandise, or other goods and/or services that the donor receives. You should NOT state in solicitation materials, catalogs, or tickets that the donor’s payment is tax-deductible if the donor is receiving something of value in exchange for the contribution.
- The IRS is clamping down on organizations which do not follow the disclosure requirements — A law enacted by Congress in 1993 establishes strict rules governing the sale of tickets for special events, the sale of auction items, and other situations where the donor is receiving something of value in return for his/her donation. After years of advising charities that they should tell donors that some portion of the ticket price is not tax deductible, and years of frustration in watching frequent and flagrant violations of this rule, the IRS is clamping down.
VIOLATIONS: The penalties for violating these requirements can be severe. A charity
may be assessed a penalty of $10 per contribution, up to a maximum of $5,000 per
Standards for Excellence Institute members, Licensed Consultants and Replication Partners can download this updated nonprofit disclosure resource from the Standards for Excellence website (login required). If you would like to become a member of the Institute to gain access to this document, as well as other benefits and resources, you may join online or contact Susan Larsen at 443-438-2323 or firstname.lastname@example.org for more details.