IRS Information About Fundraising & Donations
The Internal Revenue Service (IRS) says that Westminster Public Schools is a governmental entity and is to follow guidelines for the Internal Revenue Code (IRC) Section 501(c). Under the Internal Revenue Code 501(c) section it states that we are to follow the guidelines that are statutorily classified as public charities under the 509(a) of the IRC.
As a district we are doing minimal fundraising. If the district receives more than the $25,000 per year, we will need to change our exemption status and start filing tax returns. While we are not saying you can’t fundraise, we are saying keep the events that benefit our kids in your building and any other large or community fundraising pass to the Education Foundation or our 501c (3) organizations.
Charitable Contributions: Substantiation & Disclosure
Organizations that are tax exempt under section 501(c)3 of the IRC must meet certain requirements for documenting charitable contributions. The federal tax law imposes two general disclosure rules: 1) a donor must obtain a written acknowledgment from a charity for any single contribution of $250 or more before the donor can claim a charitable contribution on his/her federal income tax return; 2) a charitable organization must provide a written disclosure to a donor who makes a payment in excess of $75 partly as a contribution and partly for goods and services provided by the organization.
Expenses incurred in soliciting contributions, gifts, and grants. These include all fundraising expenses, including allocable overhead costs, which incurred in: (a) publicizing and conducting fundraising campaigns; and (b) soliciting bequests and grants from foundations or other organizations.
Record Keeping Requirement
A donor cannot claim a tax deduction for any contribution of cash, a check or other monetary gift unless the donor maintains a record of the contribution in the form of either a bank record, such as a canceled check or a written communication from the charity, such as a receipt or letter showing the name of the charity, the date of the contribution, and the amount of the contribution.
- Generally, a donor advised fund is a separately identified fund or account that is maintained and operated by a section 501(c)3 organization, which is called a sponsoring organization. Each account is composed of contributions made by individual donors. Once the donor makes the contribution, the organization has legal control over it. However, the donor, or the donor's representative, retains advisory privileges with respect to the distribution of funds and the investment of assets in the account.
- And while the tax law generally does not mandate particular management structures, operational policies, or administrative practices, it is important that each charity be thoughtful about the governance practices that are most appropriate for that charity in assuring sound operations and compliance with the tax law. As a measure of our interest in this area, we ask about an organization’s governance, both when it applies for tax-exempt status and then annually as part of the information return that many charities are required to file with the Internal Revenue Service.
- This question is part of a series of questions aimed at having an organization provide information about where, how and with whom it conducts fundraising. The intent of this question is for organizations to describe their actual or planned fundraising efforts rather than possible or speculative programs. Although fundraising provides an important opportunity for organizations to inform the public about their programs and gather financial support, it also provides opportunities for abuses. Being informed of the entire range of fundraising efforts in which an organization is involved, the IRS can exercise appropriate oversight as part of the application process.
- A charity's organizing document must limit the organization's purposes to exempt purposes set forth in section 501(c)3 and must not expressly empower it to engage, other than as an insubstantial part of its activities, in activities that do not further those purposes. This requirement may be met if the purposes stated in the organizing document are limited by reference to section 501(c)3
- Finally, organizations receiving annual contributions of $25,000 or less are exempt from the Act’s registration requirements as long as they don’t compensate anyone to conduct solicitations. 10 P.S. §162.6(a)(8). Each year organizations must also file reviewed financial statements if their gross contributions exceed $25,000 per year and audited financial statements if their gross contributions exceed $100,000 per year. 10 P.S. §162.5(f) Some states don’t require reviewed or audited financial statements while others have review and audit thresholds different from States. Organizations must file annual registration statements for their immediately preceding fiscal year. 10 P.S. §162.5.