There is no doubt that the LGBT community in New Orleans gives a lot money to various charities; that benefit many people in need. From April to December, members of the community will give thousands of dollars to show their support and compassion for the LGBT community. However, in recent months some people that I know began to ask questions as to why they never could get a receipt for their donation(s) at some of these events. It really is simple and I will use two of the largest events in New Orleans; Southern Decadence and the Gay Easter Parade. Now understand that the statements expressed in the article are my opinions and do not reflect any organization(s) and/or person, other than myself. I also want to state, there are many people within the LGBT community who work hard to raise money for various charities in the New Orleans area, and I'm in no way diminishing their hard work and accomplishments.
You have to understand that there are two different types of non-profit tax exempt classifications; a 501(c)(3) and a 501(c)(4). Under IRS codes many nonprofit organizations are created for the purpose of providing some benefit to the public. Depending on the specific civic purpose of the organization and its anticipated level of involvement in politics, it may be eligible for a federal income tax exemption under sub-chapter 504(c)(3) or 501(c)(4) of the Internal Revenue Code.
According to IRS rules, public charities, private foundations and organization that promote a religious, scientific, charitable, or literary purpose may purse a tax exempt classification known as 501(c)(3) status. By contrast, civil leagues, and local association that further a social welfare objective but do not quite rise to the level of a charitable organization and may purse 501(c)(4) status. Another important aspect of these two are under a 501(c)(3) deduction are available to individuals and businesses, and are entirely deductible as a charitable contribution on the donor’s tax returns. While donations made to a 501(c)(4) are generally not deductible.
Got It! It’s really a lot, but important to understand.
So, let’s look at Southern Decadence! This event is listed as New Orleans Southern Decadence, Inc., charter number 41213635N as recorded by the Louisiana Secretary of State. It is also not listed as a 501(c)(3) or (4). Therefore, any donations made to this organization are not tax deductible for any individual or business who gives money. The same can be said for the Gay Easter Parade, book number 57-0205 which according the Louisiana Secretary of State is not listed as a business or nonprofit, but held under Ambush Magazine as a trade mark for printed matter, advertising & Business, and is not listed as a 501(c)(3) or (4).
What about donations I make to Southern Decadence and/or Gay Easter Parade for fundraising event(s)? Well let me give you an example: you give $100.00 (cash) at a fundraising event, unless you receive a receipt that shows the name of the registered nonprofit, date, amount and signature you cannot deduct that from your personal federal income taxes. The same for a check (which can serve as a receipt), it must be written directly to the organization. The organization must be a recognized 501(c)(3) or (4) as outlined by the IRS to accept donations. Sponsorship's are basically the same thing, as a single donation, and the same rules apply as stated in the example.
In the case of Southern Decadence or the Gay Easter Parade, according to the IRS (agent Johnson #10001961**), “if you give money to an organization that is not registered with the IRS as tax exempt you cannot take any deductions, nor can you ask or receive a receipt, it illegal to do so”. Since both of these events are not registered with the IRS, guess what you’re out of luck. So, can anyone take the deductions? Yes. So, if New Orleans Southern Decadence, Inc. writes a check for an amount, they can in theory take the total federal deductions allowed by IRS rules for deductions. The Gay Easter Parade which is not listed by the Louisiana Secretary of State as a nonprofit or business, but held under Ambush, Inc, who could write a check to the charity and in theory take the total federal deductions (I am not implying or suggesting they do).
This seems strange to me, if either Southern Decadence and/or Ambush are taking any federal charitable (at the time of posting of this article neither Ambush and/or New Orleans Southern Decadence responded to requests for confirmation or comment), deductions, hell their getting one sweet deal. I mean the community gives them money throughout the year and they might be taking large deductions on their federal taxes. Another point to make is that they never disclose that donations are not tax deductible (which is a requirement); and if they are in fact claiming the deductions. They only state how much they have raised, and given to the charities after expenses. With regards to the Gay Easter Parade it clearly states to make checks payable to Ambush/gep (sponsorship form), they also claim to have raised $264,784.41 in the last 15 years. Either way the question is; is someone taking large charitable deductions? If so, why? Does it even seem fair that we give this money so that it can assist or help our community, without the benefit of claiming a personal charitable deduction?
Regardless of how you feel about this subject, I think it’s wrong to not have full disclosure. The community should be informed that our donations are not federally tax deductible, that you will not receive a receipt for your donation. To some in the community this issue isn’t important and I respect that, but for some who give large amounts of money throughout the year it is important.
Image: istockphoto.com purchased for commercial use.
Exemption Requirements - 501(c)(3) Organizations
Exemption Requirements - 501(c)(4) Organizations
IRS Publication 526. Catalog No. 15050A. Dept. of Treasury, Internal Revenue Service. 2016
IRS Publication 557. Catalog No. 46573C. Dept. of Treasury, Internal Revenue Service. 2017
IRS Publication 1771. Catalog No. 20054Q. Dept. of Treasury, Internal Revenue Service. 2016