Is a ticket to the carnival/dinner auction tax deductible?

QUESTION:
Our local unit is having a carnival as both a community event and a fund-raiser. We plan to establish a set fee for entrance, and that will include a dinner (spaghetti, salad, drink and dessert) as well as several carnival games. We are tax exempt under section 501(c)(3) of the Internal Revenue Code, so is the fee that a family pays to attend the carnival deductible by them for federal income tax purposes?

ANSWER:
Possibly, but probably not. When one makes a donation to a qualified 501(c)(3) organization, and in return receives a benefit, only the difference between the amount paid and the fair market value of the benefit may be deducted. For example, if I make a donation to a nonprofit that operates a radio station, and get a tee shirt in return, only the difference between the amount of my donation and the tee shirt is tax deductible. In the case of the carnival, you would need to calculate the fair market value of what the participants will be receiving – dinner and an evening’s entertainment. Keep in mind that it’s the value of the benefit that’s received—not the cost to the PTA of providing the benefit—that’s important. Another way of thinking about it is what you would expect to pay for a comparable event at a commercial establishment. If your fee is significantly above that value, then the difference may be tax deductible.  You would also need to let participants knowin advance that they are making a donation in addition to purchasing entrance into an event. 

Details About the Nominating Committee

QUESTION:

Our local unit is getting ready to elect its Nominating Committee for next year, but in reviewing the Nominating Committee section of the Leadership Packet I couldn’t find anything about the mechanics of conducting the election.  Does the election have to be paper vote, only paper vote if more than 3 want to serve?  Can we vote in our three primary members of the committee and then elect two back-up members or should all be elected at the same time?

ANSWER: 
First congratulations for moving ahead with the nomination and election process—it’s important to have your full slate of officers on board as quickly as possible so they can begin preparing for next year.  As to your question, the Leadership Packet is a great resource, but it’s not the only resource available to you.  In this instance the answer to your questions is laid out pretty well in the WSPTA Uniform Bylaws, Article 5(a)(1):

The nominating committee shall be elected at a general membership meeting of  the local unit at least thirty (30) days preceding the election of officers and shall consist of at least three (3) members and two (2) alternates. The nominating committee members shall be elected by voice vote if there are no more than three (3) nominees and by ballot if there are more than three (3) nominees.  The nominating committee alternates shall be elected by voice vote if there are  no more than two (2) nominees and by ballot if there are more than two (2)  nominees. A plurality vote shall elect. The designated number of candidates receiving the highest number of votes shall be declared the nominating committee. The committee shall select its chair at its first meeting.

Can a unit raise money for a national charity?

QUESTION: 
Some parents and teachers want our local unit to conduct a fundraising drive to raise money for a national charity that is qualified as tax exempt under section 501(c)(3) of the Internal Revenue Code. Is this something  that PTAs can do without jeopardizing our tax exempt status under section  501(c)(4) of the Internal Revenue Code?  Would your answer be different if our PTA converted to a 501(c)(3) status?

ANSWER:
The Internal Revenue Service has recognized that students’ education is enhanced by participating in activities such as you describes because it expands their awareness of and connection to their community, the rest of the country and the rest of the world.  Assuming that promoting education opportunities for students (or words to that effect) was included as one of the PTA’s tax exempt purposes in the IRS 1024 when it applied for tax exempt status, the answer is yes, PTAs can participate in such activities.

If the PTA were tax exempt under section 501(c)(3), than its application for tax exempt status (which would include its statement of purpose) would be on a IRS 1023 form; other than that the answer to the question would be the same.