Donations to school parent association deductible ascharity?


J

Jonathan Kamens

A private, non-profit religious day school has a parent
association. Donations to the school are tax-deductible.

The parent association keeps its own bank account. Assets,
cash and non-cash, transfer back and forth between the parent
association and the school on a regular basis.

Parent association essentially "reports" to the head of school
There are regular meetings between the leadership of the
parent association and the head of school, and it is
exceedingly unlikely that the parent association would ever do
anything that the school administration actively disapproved
of.

Parent association is not, as far as I know, incorporated as
any sort of entity. Its bank account is under the name
"<school> parent association."

In my mind, the parent association is an organ of the school,
and donations made to the parent association are therefore
deductible because donations to the school are deductible.

Agree or disagree? Why?
 
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J

JoeTaxpayer

A private, non-profit religious day school has a parent
association. Donations to the school are tax-deductible.

The parent association keeps its own bank account. Assets,
cash and non-cash, transfer back and forth between the parent
association and the school on a regular basis.

Parent association essentially "reports" to the head of school
There are regular meetings between the leadership of the
parent association and the head of school, and it is
exceedingly unlikely that the parent association would ever do
anything that the school administration actively disapproved
of.

Parent association is not, as far as I know, incorporated as
any sort of entity. Its bank account is under the name
"<school> parent association."

In my mind, the parent association is an organ of the school,
and donations made to the parent association are therefore
deductible because donations to the school are deductible.
I agree mostly. Don't they need to be registered as a charitable entity,
and send you a notice to that effect when you donate?
 
J

Jonathan Kamens

JoeTaxpayer said:
I agree mostly. Don't they need to be registered as a charitable entity,
and send you a notice to that effect when you donate?
The school is registered with te IRS.

Per Pub. 1771, donations of $250 or more must be acknowledged
by the charity, but a canceled check, bank statement,
credit-card statement, or other contemporaneous record showing
the donation is sufficient to substantiate donations under
$250.
 
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S

Stuart A. Bronstein

A private, non-profit religious day school has a parent
association. Donations to the school are tax-deductible.
When you say "parent association" I will presume you mean an
association for the parents of students in the school, not an
organization that is a parent of the nonprofit.
The parent association keeps its own bank account. Assets,
cash and non-cash, transfer back and forth between the parent
association and the school on a regular basis.

Parent association essentially "reports" to the head of school
There are regular meetings between the leadership of the
parent association and the head of school, and it is
exceedingly unlikely that the parent association would ever do
anything that the school administration actively disapproved
of.

Parent association is not, as far as I know, incorporated as
any sort of entity. Its bank account is under the name
"<school> parent association."

In my mind, the parent association is an organ of the school,
and donations made to the parent association are therefore
deductible because donations to the school are deductible.
The issue is whether the parent association is a branch of the
school. To be, the school would have to supervise (or at least
have the opportunity to supervise) all actions and finances of the
association, and be responsible for the association's actions. As
a part of that supervision it would have to assure that the
association only used its funds for purposes that coincided with
the school's exempt function.

A different but similar approach that would allow donations to the
association to be deductible is if the school functions as the
fiscal agent for the association. Usually when one nonprofit
functions as the fiscal agent for another, any contributions are
made officially to the nonprofit, but earmarked for the other
organization (I don't know off the top of my head whether that is
mandatory). One of the duties of the fiscal agent it to make sure
that all funds raised are used only for things that are consistent
with the exempt purpose of the nonprofit.

The bottom line is that any contributions need to be explicitly for
purposes of supporting the school's exempt purpose, and the school
has to be responsible for being sure that actually happens. If
either of those are absent, contributions are not, in my opinion,
deductible.

___
Stu
http://DownToEarthLawyer.com
 

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