As fundraising season ramps up across East Texas, we want to help our donors navigate IRS rules surrounding charitable contributions connected to fundraising events.
Many fundraising opportunities—including gala table sponsorships, golf tournament teams, and similar event sponsorships—provide attendees with benefits such as meals, entertainment, gifts, or participation in an event. When donors receive something of value in exchange for their contribution, the IRS requires nonprofit organizations to provide a good-faith estimate of the value of those goods and services. Full explanation of the rules can be found in IRS Publication 1771.
These rules are especially important for donors who utilize Donor-Advised Funds (DAFs). Current IRS regulations allow DAF grants to cover only the charitable portion of a sponsorship or event contribution. Any portion representing goods, services, meals, entertainment, or other benefits must be paid directly by the donor and cannot be funded through a DAF grant.
The grants team at ETCF is aware of these rules and can guide fund holders through these situations. Our team is here to work with the nonprofit to determine the personal benefit amount and then thoughtfully assist you on the charitable portion that your fund can cover.
If you are considering a sponsorship, planning a fundraising event, or if you have questions about how these rules apply to a specific situation, we encourage you to contact ETCF. Our team is happy to help donors and nonprofits work through the details so that contributions are handled appropriately and everyone can remain in compliance with IRS requirements.
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