Legal and Tax Issues for Fundraising Activities

In many states funds gained by fundraising are not taxable, but it sometimes depends on the organization. For instance, in Illinois, if your organization were considered to be religious, educational or charitable you would need to make an application for exemption ‘E’ status. This would entitle you to be exempt from incurring Use Tax in some cases.

In some states, religious groups must collect tax on sales, but they may have one tax free sale per year so long as they own what they sell and are selling to members of the public. The sale must not last more than three consecutive days and must be conducted by members of the organization.

In other states, any non-profit organization is exempt from tax. If schools hold a book fair in conjunction with the publisher and get a percentage of their profit for fundraising, they don’t have to pay tax on it, but the publisher must pay tax on their portion.

For individuals who deicide to raise money for a charitable cause, if you keep it under a few hundred dollars, then you can probably get away without any legal work - except that you must always keep a strict record of your budget and all financial comings and goings. However, if you are thinking in bigger terms, you may be wise to set up a charitable organization that will be exempt from taxes under the IRS Section 501 (c) (3).

The reason for this is that whatever money you get is considered part of your income and you have to pay tax on it yourself, even though you are not going to keep it. The IRS will want to know exactly how much you made and where it came from and what you did with it. If you can’t answer them, they will - to put it mildly - be annoyed. And you will be in hot water.

Another reason is that at least some people - and maybe most - will want a receipt so they can write that donation off on their tax. If you give them a personal receipt it cannot be legally used for that purpose. They will want to know how their money is going to be spent and you are accountable to them for it. If you have an organization, they will be able to verify your trustworthiness by looking at the books and other things that such an organization must have.

It would be a good idea to take half an hour to consult with an attorney about the whole business. If you follow his advice, it will protect you from possible problems further down the track.

Get This Great MP3 Audio & E-book!

How to Set Up a Lecture or Meeting with Supporters Once you have a loyal band of supporters to help ...
read more

How to Encourage Annual Giving from Your Supporters Once you have good supporters, it’s a great deal easier to encourage ...
read more

How to Plan a Fundraising Event All events take a great deal of planning and the fundraiser is no exception. ...
read more

How to Create a Budget for Your Fundraising Event The necessity of creating a budget for your fundraising even cannot ...
read more

Legal and Tax Issues for Fundraising Activities In many states funds gained by fundraising are not taxable, but it sometimes ...
read more

How Will You Thank Your Supporters? Once the fundraising even is over and has been successful, then you will need ...
read more

Could Your Organization Get a Grant? Firstly, where do grants come from? There are several sources foundations and federal government, ...
read more

How to Accept Fundraising Donations Online Once you have your fundraiser website set up, the next step is to monetize ...
read more

How to Create a Gift Campaign to Raise Funds for Your Organization Fundraising depends on a number of strategies to ...
read more

How to Create a Press Release for Your Fundraiser A press release is an important component of your fundraising event. ...
read more

What is Your Fundraising Goal? Many organizations depend on fundraising to get the things they need. People fundraise to get ...
read more

How to Enlist Help with Your Fundraiser from Current Supporters Your current supporters are the mainstay of your organization. You’ve ...
read more

How to Generate Gifts or Donations for Your Fundraiser from Sponsors To generate donations or gifts from sponsors, you will ...
read more

How to Request a Grant or Get a Renewal for Your Organization Once you have found a grant that your ...
read more

How to Suggest Inheritance Giving from Supporters Inheritance giving plays quite a large part in the fundraising processes. It may ...
read more

Tips for Creating an Effective Website for Your Fundraiser To have a website for your fundraiser is to take advantage ...
read more

Tips for Developing Printed Material that Attracts Support for Your Fundraiser To develop printed materials that are eye-catching and will ...
read more

Does Your Issue or Organization Look Worthy? To fundraise successfully, your organization needs to look worthy. How many times have ...
read more

What Tools or Skills do You Have Available? To complete a fundraiser successfully you need to have access to various ...
read more

What Equipment or Assets are Available? Once you start fundraising in earnest - or rather, before you start, you need ...
read more

Who are Your Current Supporters? The supporters for any fundraising event are usually those who are passionate or interested enough ...
read more

What is Your Fundraising Strategy? Implementing specific strategies is done in all levels of business and no less in fundraising. ...
read more

What Will Motivate Support for Your Issue or Organization? Every organization needs support to be a success and fundraising is ...
read more

How Will You Communicate Your Message? A compelling message will communicate your ideals and goals not only to your helpers ...
read more

How to Attract Media Attention to Your Fundraiser Every fundraiser will be the better for a spot - or big ...
read more

Creative Cheerleading Fundraising Ideas There are many things you can do if you are looking for creative ways to raise ...
read more

How to Come Up with a Novel Fundraising Idea There are many ways you can come up with a fundraising ...
read more

Coming Up with Unique Fundraising Ideas When you come up with unique fundraising ideas you need to think about a ...
read more