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Stacy Lubbers
May 24, 2021

For nonprofits, spring and summer bring with them the possibility of outdoor fundraising events such as golf tournaments, car washes, fun runs, dunk tanks, bake sales, etc. While these events are a fun way to engage donors and supporters, there are some compliance concerns that nonprofits should take into consideration.

Registration.  A majority of states require nonprofits to register with the state prior to engaging in any solicitation or fundraising activities.  

Liability.  For special events, it is prudent for nonprofits to add-on additional coverage for the event, or to explore obtaining a special policy for the event.  

Volunteers.  If your event requires a significant number of volunteers, we recommend training these volunteers with your nonprofits mission and vision, and if the volunteers will be personally capable of receiving donations from supporters or new donors, there should be a way to track these gifts and the volunteers receiving and reporting those gifts.

Donations.  It is important for the nonprofit to have the fair market value amount of the goods or services the donor is receiving in comparison to the gift given. In most cases, nonprofits are also required to present these donors with an acknowledgment letter including the fair market and deduction values. This same analysis applies for non-cash gifts as well as any sponsorships the nonprofit may obtain for the event.

Unrelated Business Income.  If the nonprofit raises money from gaming or other special events, additional analysis may need to be performed to ensure that the nonprofit is not receiving a significant portion of income that could be taxed as unrelated business income.  

As your nonprofit plans for any special events or has any questions about best practices or compliance issues, give our tax-exempt attorneys a call.

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