Business-Sponsored Nonprofit Events: Avoid Tax Consequences
By: Erik W. Stanley, Esq.
Businesses commonly sponsor concerts, fairs, and other events to support nonprofit organizations. However, if these sponsorships do not meet certain specifications, the Internal Revenue Service (IRS) will consider their donations or participation in these events taxable income for the nonprofit. As a result, nonprofits should be aware of the potential tax consequences when they receive payment from businesses to sponsor their events and work to avoid them if possible.