Accepting Donations Is Increasingly Complicated Business

While I have written about this before, of late it seems that the decision to accept a donation from someone is increasingly one requiring deliberation. An article on The Conversation lays out a case for either having a morals clause or time limits on any donation that involves naming rights.  Citing the number of non-profit arts, cultural and educational institutions who have refused to accept donations from the Sackler Family due to their ownership of opioid maker Perdue Pharmaceuticals, author Terri Lynn Helge notes it is easier to refuse a donation than to refund one.

As a nonprofit law scholar, I have seen that it’s much harder to sever prior arrangements with donors embroiled in scandals than it is to stop taking money from donors who are the object of public outrage.


When these scandals strike, charities face a dilemma – keep the money given by the now-tarnished donor or return the tainted funds. But returning the funds may be easier said than done.

Once the money is given away, it’s committed to charitable use. Returning that money just because the donor’s reputation is now sullied may get the charity in trouble with state regulators.

Helge mentions donations from Harvey Weinstein and Bill Cosby as cases where organizations began to experience negative perceptions of their brand and were faced with refusing a donation or making public statements distancing themselves from the donors.

Increasingly these are issues non-profits of any size need to consider as they accept and recognize donations from a variety of sources. Both returning the donation and grinning and bearing the bad publicity can be equally bad options:

They can give the money back, perhaps with interest. They can suspend programs or professorships named after the donors whose names have become an embarrassing burden, perhaps with threat of litigation from the donor for not fulfilling the charity’s end of the bargain. Or, they can continue to maintain the donor’s name and face public outrage.


Once the cost of doing nothing gets too high in the long run, charities may implement costly options to terminate the association.

That is why in my view, museums and other recipients of the drug-making family’s philanthropy could eventually redirect their donations. But that won’t happen until what they lose by honoring Sackler gift agreements becomes more exorbitant than satisfying all of the anti-Sackler movement’s demands.

Don’t Solicit Ads For Your Program Book

Thanks to Drew McManus for remembering that Butts In The Seats turned 15 this weekend. Hard to believe I have been writing for 15 years now. Hopefully readers have found the content worthwhile.

Speaking of which….

Over on ArtsHacker today, I had a post on a very worthwhile subject– Unrelated Business Taxable Income.

I know, you are fighting to keep your brain from shutting down right now.

What that translates to for non-profit arts organizations is, among other things, any advertising you may have in publications, playbills, social media and web posts, etc., is considered an activity unrelated to your organizational purpose which means you need to pay taxes on it.

Now before you panic too much, placement of sponsors logos and contact information is permitted within the scope of your non-profit status. While advertising versus sponsorship may sound like a distinction without a difference, there are strict guidelines you need to follow.  There can’t be comparative or qualitative language, no pricing, no inducements/endorsements to use/purchase a product/service.

If this sounds like something you have run into trying to promote an event on a public radio station, that is exactly what it is. At one time I thought it was a characteristic of public broadcasting charters so they didn’t compete with commercial broadcasting. In fact it is a characteristic of non-profit status so it also includes school yearbooks, neighborhood sports leagues, community newsletters, etc.

The post I made isn’t a comprehensive discussion of the matter. I didn’t even try to tackle the recent change that made providing employee parking something non-profits need to pay taxes on. It is a good place to start before following up with an accountant or attorney.

On a semi-related topic, I also made a post about the detail to which a non-profit needs to go when valuing and acknowledging a gift from a donor.   Even if you think you know a lot about this subject, it is worth checking about because money from donor advised funds are viewed differently than those received directly from the donor. Given the growing popularity of donor advised funds, there are likely things you will want to learn more about from an accountant or lawyer.

You Need To Pay Taxes On Program Book Ads

Valuing and Acknowledging Donations

No Such Thing As Free Parking

Gene Tagaki at Non Profit Law blog tweeted about IRS guidance for non profits that are now faced with having pay to taxes on the parking they offer employees.

If you didn’t know that you had to pay taxes on free or subsidized parking now….well you aren’t alone. It came as a surprise to a lot of people at the end of last year. Basically, whether you are an employer or an employee where free or subsidized parking is part of the employment package, there is tax to be paid.

The new rules aim to help taxpayers calculate the amount of parking expenses that aren’t tax deductible anymore since the passage of the TCJA. The guidance also is supposed to help tax-exempt organizations and their accountants figure out how the now nondeductible parking expenses can either create or increase unrelated business taxable income, or UBTI for short.

If any of this concerns you, you may want to read the article and chat with your accountant. The new guidance from the IRS is causing a lot of grumbles due to how late it is. (Mea culpa, I meant to post on it months ago, too)  A lot of non-profit groups were hoping for a repeal of these rules rather than tardy details on how to comply with them.

Broader Conceptions Of Creative Placemaking

Last week I attended the Creative Placemaking Summit for the Appalachian region.  As much as I have read and written about Creative Placemaking, I don’t think I fully understood the what it encompassed until I attended this conference.

Hearing multiple people from various communities talk about the whole process of their projects from the involvement of government officials to securing funding and structuring financing to the sweat equity the arts and cultural invested in renovations, everything coalesced to provide me with a more complete understanding.

The topics of discussion and the level of detail were entirely different from what I have encountered at other arts and cultural conferences.  It reinforced for me that things don’t just happen in a vacuum. You can’t just plant art somewhere and assume economic and creative vitality will be attracted like honeybees if you can just stick it out long enough.

I had written about projects like the Poetry Parking Lot in Lanesboro, MN holding it up as a cool, creative idea. But having John Davis of Lanesboro Arts talk about how that project was driven by a desire to have tourists use that lot and how the renovation of a bridge to provide a pedestrian connection to the downtown was an important element provided a new context. The haiku on the light posts in the parking lot were only one of the incentives to use that parking lot. The others were the improved access afforded by the bridge and the two hour parking limit on downtown streets.

What I came to recognize was summarized by a comment one of the presenters made during the conference – Arts and cultural organizations need to realize creative placemaking can’t really be supported by grants.  Basically, just having artistic activity isn’t going to create economic vibrancy. Someone is going to have to arrange for financing and loans. Even in those cases when it isn’t the arts and cultural organization arranging for the financing directly, they are probably going to have to negotiate and partner with people who are doing so.

In some cases local banks won’t/don’t get into creative placemaking financing because the projects are outside their experience. You may need to cultivate a long term relationship with a regional CDFI (Community Development Financial Institutions).  Where most arts oriented conferences will have discussions about cultivating relationships with granting organizations and funders, this creative placemaking conference spoke more about relationships with CDFIs and community development corporations and foundations.

In some cases, the focus of placemaking efforts was in a much broader context than I am accustomed to hearing. One presenter talked about a project in Jersey City, NJ driven by an alliance of artists and arts groups. Their hope was to renovate a building with a community arts center on the first floor and affordable housing on the second through fifth floors. However, they determined if they had to give up something, it would be the community arts center. The fact that an alliance of arts oriented people felt that affordable housing was more important than a creative space made an impression.

In another session, Ben Fink from Appalshop talked about how they were getting involved with energy projects. He admitted it may seem strange that an organization founded on broadcast media and performance was advancing solar energy projects in coal country. Part of the reason is that high energy costs are threatening the existence of a number of local entities from bakeries to bluegrass festival sponsoring volunteer firehouses. He said the end goal wasn’t the completion of the solar project, it was to use solar energy to power the next projects.

The conference was populated with stories of groups that were renovating old buildings and storefronts and providing a place for the community to give voice to their creativity, but there were also stories like those in NJ and Appalshop that expanded my conception of the role arts and cultural organizations could play in the community.

If you have the opportunity to attend either the national or regional conference summits, it may be worth your time and the added perspective. It was actually less expensive to attend than some other conferences I have been to. (Not sure if that is the case for all the convenings since the cost for past and future conferences are not available on the website.)

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