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May trade association hold fundraiser for charities?

Your Legal Questions Answered

May trade association hold fundraiser for charities?

We are a 501(c)(6) trade association that is considering holding an annual charity golf tournament to support various children’s charities. We will raise the funds by offering sponsorships and by the entry fees without using any professional fundraiser. Are we OK in doing this or would you advise us to stay away from it?

You certainly may hold a fundraiser for charitable organizations.  Unfortunately, because you are a (c)(6) trade association, donors to the event will not be able to claim charitable contribution deductions.  That may not be a big drawback however.  Sponsors may not care because if they are businesses they may be able to deduct the payment as an advertising or public relations expense.  Individual participants may think it is enough fun that they are willing the pay the entry fees without a deduction.  If it is not a very big and regular event, it may not be worthwhile to create an affiliated charity or to get recognition of a separate segregated charitable fund. 

Not being able to give deductibility to gifts, however, does not mean that you don’t have to register in those jurisdictions that require registration before solicitation of charitable contributions.  If you advertise that the proceeds will be used for charitable purposes, that will probably be sufficient to bring you within the registration requirements even though your own organization is not a charity.

Tuesday, December 3, 2013

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