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Non-Profit Contribution with Invoice Liability

Kathleen Reardon's Profile

Hi- we received a check from a large company of which 80% was to be paid out to an advertiser (they did some promotion work for us).

How should this be treated? And is it allowable (on either side) It would seem they get to deduct full amount but I am not sure if this is detrimental to our company?

Looked at IRS site but most of the information was on whether or not it was a tax deduction to the donor...

thanks for any insight,
Kathleen

Answers

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

Here is my interpretation.

The liability to the advertiser is yours. You would have paid the advertiser with or without the donor's money. The donor basically just said to apportion (directed) 80% of the donation as payment to the advertiser. I do not see why it will be detrimental to your company. You even have to show that (payment to advertiser and other directed funds/contributions) in the donor's individual contribution summary...else, you can have legal repercussions.

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Kathleen

Why did they send you the check?
-Donation?
-For services you provided?
Was there a contract/agreement that ties the amount received to your liability to the advertiser?

There are guidelines where a donation received needs to be split into two parts (e.g. you charge $150 for a banquet fund raiser, where $60 is applied to food, and $90 is the actual donation).

Hopefully some NFP folk can add/correct my thinking...

Kathleen Reardon
Title: Controller
Company: South Shore YMCA
(Controller, South Shore YMCA) |

Thanks to both of you.

it was a donation from one company with the agreement that we would pay a particular radio station for advertising expense...so we were thinking to book 100% as donation and expense the 80% to fundraising expense. Conceptually like a TR donation I guess where they direct where the funds are spent...

we have a few opinions on how to treat so of course want the one that makes the most sense and follows any guidance...

Kathleen

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