Financial Corner - Donations
As the Financial Director of The Battalion, and on behalf of the entire board of directors, I would like to thank each of you for the initial outpouring of support we received in the weeks following the corps’ launch. These are truly exciting times for all of us! The following is designed to address several of the recurring financial questions we have received since the launch.
By way of background, my role as the Financial Director is three-fold: first, to ensure The Battalion operates in accordance with a board-approved budget and is otherwise fiscally responsible in all aspects; second, to manage and record the financial happenings of the corps; and third, to ensure that The Battalion complies with state and federal tax laws, IRS regulations, and other accounting standards.
In June of this year, The Battalion Drum & Bugle Corps, Inc. was properly incorporated as a non-profit entity in the State of Utah. One of the great advantages of being incorporated as a non-profit entity is the opportunity afforded us to apply for tax-exempt status with the IRS. Receiving tax-exempt status ensures that we are not required to pay taxes on any of our gross receipts and it enables donors to receive any allowable tax deduction if they choose to itemize their deductions.
The Battalion is a 501(c)3 tax-exempt entity. As we get closer to tax season, donors will receive tax receipts containing all of the necessary information for them to document their donation on their tax return.
Many of you have already registered your student to attend our first clinic to be held on Friday, November 21 and Saturday, November 22. There is a nominal fee assessed to those attending the clinic – all of which goes towards providing this experience. Costs for this clinic include the wonderful, decorated, and talented staff, some of which we must fly in, and all of whom we must compensate. It also includes the rehearsal space, insurance, meals, and t-shirts for participants. We have carefully budgeted and considered the clinic fees and set them so that we can cover the costs associated with hosting this clinic.
This fee – $35 via online pre-registration – constitutes your purchase of an experience that has a “fair value” of $35 and as such, in the eyes of the IRS, is to be designated as a purchase. Similarly, all future clinic/camp fees, tour fees, and purchases from the upcoming The Battalion store will also be labeled as "purchases" and are not considered tax-deductible contributions. Because of this designation, you will not receive a tax receipt for these transactions.
I know what one might be inclined to think at this point, “Surely there is a way around this. I’ll simply make a ‘donation’ of $35 instead of paying the clinic fee and still have my student attend the clinic." While this may seem like a logical solution that will afford one the tax-deductibility, this is not a viable alternative. While donations, at their core, are one-sided transactions, a student’s participation in any event hosted by The Battalion represents the purchase of an experience, which is a two-sided transaction.
One final note of emphasis; any deviation from the listed policy above, including attempting to mislabel purchases as donations, may result in The Battalion losing its tax-exempt status – which would be extremely harmful to the organization. As such, we intend to hold to our policy of only issuing tax receipts to those who have made donations, as designated by the IRS.
If you would like to read section 501 of the Internal Revenue Code, or would like more detail regarding the process of applying for tax-exempt status, feel free to click on the following links for Exemption Requirements or Applying for Exempt Status. For more information regarding deductible donations please see Charitable Contributions.
Again, we thank you for your support surrounding the launch of The Battalion! We look forward to providing an incredible educational environment for your students and hope that you may come to receive as much joy from this endeavor as we have. We certainly look forward to working with each of you in the coming months and years. If one of your financial questions was not addressed, please do not hesitate to reach out to me directly via email at email@example.com.
And as we say here in The Battalion: ONWARD!