I throw a variety event as a fundraiser for charity and charge $100 per ticket from 100 people. I donate my time as a world class magician. I bring in a world champion barbershop quartet who donate their time. The venue donates its space. (I take out event insurance.) Why wouldn’t every person get the full $100 ticket as a charitable tax write off? —From the Webinar.
Assuming that a charity is running the event and you are not doing it personally, the donor/purchasers and the charity are up against the “quid pro quo” rule. (If you are running the event individually, the donor/purchasers probably can’t claim any deduction because they are buying the event from you and not giving directly to the charity.)
Under the “quid pro quo” rule, if anyone pays a charity more than $75 and receives more than minimal goods or services in return, the donor/purchaser may deduct only the amount paid that exceeds the value of the goods or services received in return, and the charity is required to notify the payors of the value of the goods or services they receive. (See Ready Reference Page: “Charities Must Set Value on ‘Quid Pro Quo’ Gifts”). The donation amount is based on the value of the goods or services received, not the cost to the charity of providing those goods or services.
Therefore, if you would normally charge a fee for people to attend your world-class magic shows, or if the quartet would normally charge to present a world-class concert, the donor/purchaser is receiving goods or services that have a real value in the general marketplace. The value of those fees (and any other specific goods or services, like free refreshments at the event) would have to be deducted from the $100 ticket price to determine if anything extra is going to the charity and would therefore be deductible. No problem if the value of the two performances exceeds $100. It is as though the purchaser is buying at a “Sale” and there is no penalty (or benefit) for the purchase at less than what would otherwise be fair market value. Only if you and the quartet regularly perform at events for free or for very low compensation could you argue that the donor/purchasers are paying more than the value of this event and are therefore entitled to claim a charitable contribution deduction for the full ticket price.
To make it worse for the performers and the owner of the donated space, you get no deduction for the value of your gifts because donors cannot deduct the value of services or free use of facilities they provide to charities. In this case, you are providing benefits to the charity with no personal economic return. That is the essence of a charitable contribution.
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