Donors Want to Know

It’s no secret that events can help drive fundraising revenue, build community, and foster engagement among your current donors and potential donors. One study even noted that 81% of U.S. donors attend fundraising events every year. As you plan your next gala or golf tournament, keep in mind the special rules that apply to receiving support from donor advised funds at the East Tennessee Foundation or elsewhere.

Here’s how this works:

If a donor is hoping to support your event through a donor advised fund, the donor cannot receive in return what the IRS calls “more than an incidental benefit.” This means that dollars going toward rounds of golf, meals at a gala, t-shirts, and raffle tickets are not tax deductible. Also, a donor advised fund cannot pay any portion of that ticket or sponsorship–not even the tax-deductible portion. It is important to be aware that the IRS prohibits this type of “bifurcation.”

Remember, however, that donors can still give to your organization to help celebrate your event so long as they waive all benefits that go beyond incidentals. Acknowledging and recognizing donors are considered incidental, which means you can (and should) mention the donors in your materials and thank them at the event. If a donor would like to attend the event, the donor can certainly purchase tickets using their personal funds.

The East Tennessee Foundation is your partner in making a difference. Please reach out anytime to learn more about how donor advised funds work. Happy event planning!

This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.