{"id":2335,"date":"2014-02-10T18:58:05","date_gmt":"2014-02-10T18:58:05","guid":{"rendered":"http:\/\/www.ptachc.org\/?page_id=2335"},"modified":"2023-11-13T18:35:29","modified_gmt":"2023-11-13T18:35:29","slug":"sponsorship-vs-endorsement","status":"publish","type":"page","link":"https:\/\/www.ptachc.org\/?page_id=2335","title":{"rendered":"Sponsorship vs Endorsement"},"content":{"rendered":"<p><strong>SPONSORSHIP VS.ENDORSEMENT<br \/>\n<\/strong><br \/>\nThe law permits a nonprofit organization to receive corporate sponsorship income tax free if the sponsorship is linked to a specific event that is held once per year. It is acceptable for PTA to receive payments structured as royalties or to enter into sponsorship agreements with businesses, including e-commerce businesses.<\/p>\n<p>For the payment to qualify there must be no arrangement or expectation that the business will receive any substantial return benefit for its payment. The PTA may not enter into a partnership with a business. Partnership implies sharing in the profit and loss of the business and would result in unrelated business income and tax liability. (Unrelated Business Income Tax 5.7.6, 225)<\/p>\n<p>The PTA should acknowledge publicly the royalties or sponsorship. The acknowledgement of thanks can list the corporate sponsor&#8217;s name, logo, address, telephone number, and products.<\/p>\n<p>PTAs May:<\/p>\n<ul>\n<li>Hang a banner on the school campus with permission of the school principal per district policy.<\/li>\n<li>Hang a banner where the event is being held after a Facilities Use Permit (1.3.4a, 18) is approved.<\/li>\n<li>Place an acknowledgement in the event program book.<\/li>\n<li>Announce to the audience the event sponsors.<\/li>\n<li>Acknowledge the sponsorship of the particular event in the PTA newsletter or school newsletter, if school district policy permits.<\/li>\n<li>Distribute samples of the sponsors products at the sponsored event (if school district policy permits) or if a Facilities Use Permit (1.3.4a, 18) allows sponsored product distribution.<\/li>\n<\/ul>\n<p>The PTA may provide a hypertext link from the PTAs website to the sponsor&#8217;s website. PTA must be cautious in how this link is established. It is possible that the existence of a link might cause the sponsorship payment to be considered as unrelated business income, particularly if the link is in the form of a moving banner. A link would more than likely be seen by the IRS as retaining the passive character associated with corporate sponsorship, while a moving banner is more likely to be considered advertising.<\/p>\n<p>The duration of the link should correspond to the terms of the contract with the sponsor.<\/p>\n<p>If PTA provides a Web link to an e-commerce business, a disclaimer must be included on the PTA website. For example:<br \/>\n&#8220;PTA does not endorse, warrant or recommend any of these products. PTA will receive a small percentage of every sale. If you decide to purchase any products, we thank you.&#8221;<br \/>\nAn e-commerce business should be seen as a fundraising company acting as an intermediary or buffer between retailers and consumers.<\/p>\n<p>While the PTA obviously would put some effort into promoting the use of electronic shopping, in order to do so without risk, the following conditions must apply:<br \/>\n\u2022 Use of the program must be entirely at the discretion of the user;<br \/>\n\u2022 Unit cannot have control whether or not anyone will use the site;<br \/>\n\u2022 Unit cannot have control whether or not they are entitled to any of the proceeds; and<br \/>\n\u2022 Unit cannot release member information to a third party.<\/p>\n<p>A variety of e-commerce retailers, also known as charity malls, are donating a portion of purchases made through their sites in exchange for the goodwill the charity can generate. The charity mall allows customers to use the charity mall&#8217;s home page as a portal for shopping at any number of participating stores. For each online purchase, the PTA would receive a percentage of the sale. Working with the e-commerce business in this way, the PTA is less likely to be characterized as conducting a business, and instead, is simply receiving royalties.<\/p>\n<p>Each fundraising opportunity must be evaluated individually.<\/p>\n<p>Businesses Should:<\/p>\n<ul>\n<li>Understand PTA policies and procedures, especially in relation to the noncommercial, nonsectarian, and nonpartisan policies;<\/li>\n<li>Not violate PTA policies, positions, and goals;<\/li>\n<li>Exclude all websites that sell or feature firearms, tobacco, liquor, or adult content material;<\/li>\n<li>Have a written policy that supports education opportunities;<\/li>\n<li>Offer benefits to PTA;<\/li>\n<li>Encourage participation in PTA;<\/li>\n<li>Protect the privacy and security of users via:<br \/>\nProhibiting framing, the possibility that a third party is monitoring the transaction, when users are interacting with merchants;<br \/>\nHave privacy seals from the Better Business Bureau and trust; and<br \/>\nRequiring individuals to provide only minimal information such as name and e-mail address;<\/li>\n<li>Not require mandatory registration or membership in order to participate in the program;<\/li>\n<li>Ensure that program interface is clear, functional, and easy to use;<\/li>\n<li>Structure payments to the PTA as royalties;<\/li>\n<li>Specifically identify the PTA unit as the separate and distinct entity receiving the royalties, rather than just listing the school site;<\/li>\n<li>Provide a complete accounting for determining share of royalties on a monthly basis;<\/li>\n<li>Require a minimal amount of effort from the PTA in promotional activities;<\/li>\n<li>Be seen as a fundraising company acting as an intermediary between retailers and consumers.<\/li>\n<\/ul>\n<p>Note: made through e-commerce generally will not result in tax-deductible charitable contributions, unless the purchaser can demonstrate that the amount paid for the item exceeded its fair market value and that the excess payment was intended to be a gift to the PTA.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>SPONSORSHIP VS.ENDORSEMENT The law permits a nonprofit organization to receive corporate sponsorship income tax free if the sponsorship is linked to a specific event that is held once per year. It is acceptable for PTA to receive payments structured as &hellip; <a href=\"https:\/\/www.ptachc.org\/?page_id=2335\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"parent":1488,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"class_list":["post-2335","page","type-page","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/www.ptachc.org\/index.php?rest_route=\/wp\/v2\/pages\/2335","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ptachc.org\/index.php?rest_route=\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.ptachc.org\/index.php?rest_route=\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www.ptachc.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ptachc.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2335"}],"version-history":[{"count":6,"href":"https:\/\/www.ptachc.org\/index.php?rest_route=\/wp\/v2\/pages\/2335\/revisions"}],"predecessor-version":[{"id":9486,"href":"https:\/\/www.ptachc.org\/index.php?rest_route=\/wp\/v2\/pages\/2335\/revisions\/9486"}],"up":[{"embeddable":true,"href":"https:\/\/www.ptachc.org\/index.php?rest_route=\/wp\/v2\/pages\/1488"}],"wp:attachment":[{"href":"https:\/\/www.ptachc.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2335"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}