[Noisebridge-discuss] Fundraiser Proposal

Josh Berkus josh at agliodbs.com
Fri Aug 27 19:16:36 UTC 2010


> What sticky non-profit issues are there for us? Is this a horrible idea?
> Can we make it a mini-maker-faire type of event where people also can
> set up tables showing off kits they made, sell arduinos, etc.?

Who's our CPA?  We should ask them if charity auctions are considered 
"unrelated business income"; I don't remember what the criteria are.

Selling arduino kits, t-shirts etc, is also possibly "unrelated business 
income" (UBI).  The standards for this are confusing and conditional; 
for example an arduino kit might be considered related to NB's mission 
if being sold for a class (educational), but not if being sold separately.

The issue with UBI for a 501c3 is (a) you need to file a form for it 
with your annual 990 (b) you may need to pay sales tax (again, ask the 
CPA), and (c) if you have too much UBI then the IRS classifies you "not 
a nonprofit" and you lose your 501c3.  The standard for "too much" isn't 
completely clear, but if it's more than 10% of NB's annnual revenue, 
that's definitely dangerous.

We definitely need to provide auction winners with a form which says 
"you got X at charity auction, for a donation of $$$ for NB, a 501c3 
non-profit organization.  Value was received in return for your 
donation; consult your tax preparer to determine the charitable portion 
of your gift."  A huge no-no is supplying donors with any kind of 
valuation of the items purchased; that should be up to them.

I am not a tax preparer, but I did spend 3 years being a fundraiser at 
the Opera, including running 3 silent auctions.  NB should definitely 
consult its CPA before going ahead with such an auction.

Non-tax advice: I'd suggest having a silent auction, maybe with online 
auctioning as well, for 80% of the items.  The remaining 20% most 
valuable/interesting/exclusive should be auctioned off auctioneer-style, 
preferably after a lot of beer (we once got $1500 for a signed 
sweatshirt this way) Try to pick items you know will have broad appeal, 
and maybe ones which are unique.  This is also dependant on having a 
good auctioneer, one who knows how to work a crowd and how to play off 
bidders against each other, so if you don't have such a person, you 
might stick to an exclusively silent auction.

Do not underestimate the amount of time it will take you to tally all of 
the auctions.  Also, make sure you get full contact information for 
anyone making a bid at the start of the auction.

-- 
                                   -- Josh Berkus
                                      PostgreSQL Experts Inc.
                                      http://www.pgexperts.com



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