USA Tax Code Help Needed...

[taxhelpneeded]

I own and operate a 501(c)3/nonprofit corporation. I wish to solicit sponsorships that will provide funding to build various products. These sponsorships will be 100% tax deductible (to the allowed limit). Each sponsorship will fund one product, so to speak. We as a non-profit will then sell/license these products to distributors. From the sales of these products, we will bring in money for the non-profit to operate and facilitate our educational mission, but, we do not benefit from the sponsorships directly. The sponsorships are used as the money to produce/make the product(s).

I also have a deal with 3 'for-profit' distributors to offer the sponsors of these products a 5% rebate from the adjusted gross sales of these products, as a philanthropic equity incentive to sponsor more products that our members create/build/distribute. But, the equity rebate is not narrowed down to using our non-profit. They can choose to use someone else with that 5% rebate. These are all ways to make the initial sponsorship more inviting.

Do you foresee a problem with this structure as i have related? I do not own the distribution companies and we do not ever come in contact with the rebates, etc.

Thank you for your time!

 

[timpgoetz]

Seems fine to me. Whether or not some other company offers a rebate is not up to you to deal with. For your entity, if someone donates or sponsors, you can give them a letter indicating how much they gave. It is up to the donor to indicate on their personal taxes whether or not they got something in return for that donation, and then to possibly deduct from the amount donated when attempting to claim a deduction. Either way, seems like you are doing things fine and the real question is for the donor and their personal tax accountant to decide.
- Tim Goetz