Advancing Philanthropy October 2020 - 13

Ethics
Conversely, here are some factors which would
suggest a charitable contribution rather than a
corporate sponsorship, in addition to arrangements
that do not contain any of the factors listed
immediately above:
*	 Recognition of the payor by the
nonprofit consistent with the
recognition provided to other
similarly situated donors.
*	 Receipt by the payor of
goods or services of
nominal value, available
to the general public or
to all donors.
*	 Acknowledgement of
the payor, including
the payor's contact
information, logo (without
qualitative or comparative
descriptions), or valueneutral descriptions or mere
listings of products or services.
*	 The display or information of
samples or displays by the payor,
including hand-outs of logoed items of
minor value.
These would indicate that the payment is intended
as a charitable contribution, not a corporate
sponsorship, and would be subject to the AFP Code's
prohibition on percentage-based compensation or
finder's fees.

*	 "sponsoring" all or part of charity events such as
underwriting golf outings, charity runs and bike
rides, dinners and galas, etc.;

EXAMPLES

*	 underwriting public TV or radio broadcasts, arts
organization performances, museum exhibitions
or similar events;

1.	

If a payor provides $1 million to a nonprofit and in
return that nonprofit agrees to hold a payor-sponsored event with exclusive recognition and extensive promotion or advertisement provided to the
payor's product at the event, that payment would
be treated as a corporate sponsorship.

*	 providing no-cost items to charity auctions; and

If a payor provides $1 million to a nonprofit for the
construction of a building and that payor would
simply be listed as one of the contributors, even
if the largest contributor, that payment would be
treated as a corporate charitable contribution.

These transactions remain subject to the rule
prohibiting percentage-based compensation.
The IRS definition clearly requires more, as
suggested by the extensive list of factors cited
above, to justify characterization of a transaction
as commercially motivated and intended by the
parties that the payor receive substantial, unique,
exclusive and/or tangible benefit from the transaction
or that the prime or sole motive for the transaction

2.	

It is clear from the foregoing analysis that most
arrangements characterized as "sponsorships" by
charities, such as:
October 2020 / www.afpglobal.org	

*	 buying seats or tables at dinners and other events,
all in return for mere recognition of the donor
do not meet the IRS definition of a corporate
sponsorship.

Advancing Philanthropy	

13


http://www.afpglobal.org

Advancing Philanthropy October 2020

Table of Contents for the Digital Edition of Advancing Philanthropy October 2020

Advancing Philanthropy October 2020 - Cover1
Advancing Philanthropy October 2020 - Cover2
Advancing Philanthropy October 2020 - 1
Advancing Philanthropy October 2020 - 2
Advancing Philanthropy October 2020 - 3
Advancing Philanthropy October 2020 - 4
Advancing Philanthropy October 2020 - 5
Advancing Philanthropy October 2020 - 6
Advancing Philanthropy October 2020 - 7
Advancing Philanthropy October 2020 - 8
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Advancing Philanthropy October 2020 - 10
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Advancing Philanthropy October 2020 - 12
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Advancing Philanthropy October 2020 - 18
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Advancing Philanthropy October 2020 - Cover3
Advancing Philanthropy October 2020 - Cover4
https://www.nxtbook.com/ygsreprints/AFP/advancing-philanthropy-april-2021
https://www.nxtbook.com/ygsreprints/AFP/AFP_Jan2021
https://www.nxtbook.com/ygsreprints/AFP/AFP_Oct2020
https://www.nxtbook.com/ygsreprints/AFP/AP_July2020
https://www.nxtbook.com/ygsreprints/AFP/p26198_afp_2012techknowbrochure
https://www.nxtbook.com/ygsreprints/AFP/g24762afp_con2012
https://www.nxtbook.com/ygsreprints/AFP/g24195afp_12confbroc
https://www.nxtbook.com/ygsreprints/AFP/g18184_afp_chicago2011
https://www.nxtbookmedia.com