UPDATE on GrantBack Program: Good News From the IRS
I know that subject line is hard to believe but here's the story.
Larry Lurks (Don't you love that name? It's a name. It's an alliteration.It's a sentence. It's an attitude!) of Kansas City, MO Slam, called a fewdays ago to find out if his grant writer could use PSI's 501c(3) status towrite grants in support of hiring features for their gigs in KC. I didn'tknow the answer to that and so, after another phone call for prodding, Icalled the IRS to get the straight poop.
Here's an approximation of the IRS rules: You can't make a donation to a501c(3) organization and put grand restrictions on the gift and still callit a gift. AND you can't make a donation to a 501c(3) that will ultimatelybenefit you personally or members of your immediate family.
So, the initial take is that we are in a gray area. Consequently, I began toask the questions about the gray area to see what we can do and what wecan't do.
It goes something like this. I can't make a donation to PSI and stipulate itgoes to a scholarship fund for my daughter. That's personal benefit andprobably outside the mission of PSI.
I can't make a donation to PSI and stipulate it goes to a scholarship fundfor anyone (even if they are not my daughter) studying nuclear physics.ThatGÃÃs' outside the scope of PSI's mission.
But, Joe Philanthropist CAN make a donation to PSI for anything whichdoesn't benefit Joe Philanthropist, his spouse, offspring, parents orgrandparents and which meets the mission of PSI.
SO, here it is: If you have contributors in your community, or if you canfind grants in your community, which will help you pay to bring poets,PARTICULARLY PSI MEMBER POETS, into your local slam, they may make taxdeductible donations to PSI in support of those efforts. PSI is obligated totake a "significant" portion of those contributions for its own operationalbudget, but may pass back funds to the local organization in support ofPSI's mission. "Significant" according to the IRS agent I spoke with is inthe 10% area.
Translation: Get a grant in PSI's name to support payments to poets at yourslam or event sponsored by your slam and PSI will Grant Back up to 90% ofthat donation for that purpose. We can do it two ways: 1) The cleanest wayis for PSI to pay the poet directly. Any payment of $600 or more per year issubject to 1099 reporting requirements with the IRS. Or 2) In exchange fororiginal receipts of payment to poets, PSI can reimburse the SlamMaster(only) for that expense up to 90% of the amount of any grant or donationsolicited for that purpose.
I asked specifically about prize money to slam winners, and the answer isthe same: If the donation comes from someone who does not benefit directly,or whose immediate family does not benefit directly, that is deductible too.This is NOT for in kind contributions, only for cash. So free dinner, or $25gift certificates don't count.So here's the process:
PSI receives a donation, writes a tax deductible receipt to the donor, takes10% of the donation for its operational budget, passes 90% back to the localslam in the form of direct payments to poets or reimbursement to SlamMastersONLY in exchange for original receipts for payment to poets. Pretty sweetdeal if you ask me.
How to administer it? Through the GrantBack Program. The accounts arealready set up. It's just a matter of drafting a check out of the accountinstead of offering a credit for internal PSI expenses like Certification orNPS Application fees, etc.
There you go. Good news from the IRS.
Related story on the GrantBack Program below.
Larry Lurks (Don't you love that name? It's a name. It's an alliteration.It's a sentence. It's an attitude!) of Kansas City, MO Slam, called a fewdays ago to find out if his grant writer could use PSI's 501c(3) status towrite grants in support of hiring features for their gigs in KC. I didn'tknow the answer to that and so, after another phone call for prodding, Icalled the IRS to get the straight poop.
Here's an approximation of the IRS rules: You can't make a donation to a501c(3) organization and put grand restrictions on the gift and still callit a gift. AND you can't make a donation to a 501c(3) that will ultimatelybenefit you personally or members of your immediate family.
So, the initial take is that we are in a gray area. Consequently, I began toask the questions about the gray area to see what we can do and what wecan't do.
It goes something like this. I can't make a donation to PSI and stipulate itgoes to a scholarship fund for my daughter. That's personal benefit andprobably outside the mission of PSI.
I can't make a donation to PSI and stipulate it goes to a scholarship fundfor anyone (even if they are not my daughter) studying nuclear physics.ThatGÃÃs' outside the scope of PSI's mission.
But, Joe Philanthropist CAN make a donation to PSI for anything whichdoesn't benefit Joe Philanthropist, his spouse, offspring, parents orgrandparents and which meets the mission of PSI.
SO, here it is: If you have contributors in your community, or if you canfind grants in your community, which will help you pay to bring poets,PARTICULARLY PSI MEMBER POETS, into your local slam, they may make taxdeductible donations to PSI in support of those efforts. PSI is obligated totake a "significant" portion of those contributions for its own operationalbudget, but may pass back funds to the local organization in support ofPSI's mission. "Significant" according to the IRS agent I spoke with is inthe 10% area.
Translation: Get a grant in PSI's name to support payments to poets at yourslam or event sponsored by your slam and PSI will Grant Back up to 90% ofthat donation for that purpose. We can do it two ways: 1) The cleanest wayis for PSI to pay the poet directly. Any payment of $600 or more per year issubject to 1099 reporting requirements with the IRS. Or 2) In exchange fororiginal receipts of payment to poets, PSI can reimburse the SlamMaster(only) for that expense up to 90% of the amount of any grant or donationsolicited for that purpose.
I asked specifically about prize money to slam winners, and the answer isthe same: If the donation comes from someone who does not benefit directly,or whose immediate family does not benefit directly, that is deductible too.This is NOT for in kind contributions, only for cash. So free dinner, or $25gift certificates don't count.So here's the process:
PSI receives a donation, writes a tax deductible receipt to the donor, takes10% of the donation for its operational budget, passes 90% back to the localslam in the form of direct payments to poets or reimbursement to SlamMastersONLY in exchange for original receipts for payment to poets. Pretty sweetdeal if you ask me.
How to administer it? Through the GrantBack Program. The accounts arealready set up. It's just a matter of drafting a check out of the accountinstead of offering a credit for internal PSI expenses like Certification orNPS Application fees, etc.
There you go. Good news from the IRS.
Related story on the GrantBack Program below.
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