• Consider tax treatment. Include in your contract whether the sponsor has registered as a charitable organization and
to qualify for favorable tax treatment.
2. Change the law. have lengthy exemptions for preferred industries.
3. Become a hard target. exposure to violations for charitable solicitations and improve your defensibility if challenged.
• Do your homework. Research the statutes and regulations in those states where you operate. Does the statute
is available at <
https://www.urban.orgpolicy-centers/
• Avoid buzzwords on your website, social media, or
• Change your advertising for your sponsors. Do you really need to tell your sponsors that they are getting “free
charitable-sector-project > and helpful guidance documents from various states are collected at <
https://www.nasconet .org/resources/guidebooks-and-publications/ >.
available to reach an accommodation with a regulatory agency: declaratory rulings, petitions for rulemaking, freedom-of-information requests, variances, and compliance meetings with agency General Counsel.
• Change the nature of the economic relationship. For example, instead of a revenue split, rent the use of the property, which is a common feature for bingo game operators. Some
for a product or service is functioning as a charitable trustee and must comply with that state’s Charitable Trust Act. And look closely at whether a state’s statute is triggered by paying for admission to fundraising events, which would point in favor of avoiding pay-one-price. And if you must use POP, be sure to specify it is a use fee, not an admission fee.
similar to a commercial printer of advertising, soda company, shared marketing or taking advantage of the sponsor’s tax-exempt status) with your sponsors, which will be interpreted as a quid pro quo. An active role for a sponsor could mean that the charity is not receiving a tax-free gift but is receiving taxable unrelated business income, which might deny a deduction for a charitable contribution.
• Change the agency relationship. Think of yourself as a residential home builder or independent contractor. Avoid agreeing to act on behalf of or solicit contributions for the charity-sponsor. The Pennsylvania regulator contends that carnivals must relinquish all control of cash payments to the sponsor.
16 OABA ShowTime Magazine • MAY 2024
way such that the consuming public cannot get access to that advertising.
• Change your advertising for the event. Look at some websites for professional solicitor trade groups to get tips. Try to get the sponsor to do the advertising and sell the tickets. If you must do the advertising or sell the tickets, do not - refer to a charitable purpose for the event, - use the name of the charity, or - claim or imply that a portion of the revenue will go to a charitable purpose or to the charity.
sells school pictures and class rings, and even has an option for giving a percentage of sales to the sponsoring school, but it never tells the parents that a portion of sales will go to the charity.
• Re-name or re-frame your events. Does the event name truly need the name of the sponsor included? Some states or local jurisdictions will not allow you to operate unless you partner that requirement. And if you must use the sponsor’s name, why not list the sponsor simply as the location for the event, but without representing a charitable purpose?
• Delegate. Cede fundraising to a charity’s salaried employees. With a modicum of effort, you should be able to manage
your exposure. For further information, review the links above or get in touch with the OABA.
Mr. Pierce is the OABA’s outside General Counsel. He can be reached at
wpierce@adventurelaw.com.
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