Tips on Tax Deductions for Charitable Contributions (VI)

Lobbying Restrictions for Tax Exempt Organizations

As long as 501(c)(4), 501(c)(6), or 501(c)(19) organizations are
primarily involved with tax-exempt activities, they can engage in a
substantial amount of lobbying. However, lobbying may not be a
substantial part of the activities of a 501(c)(3) organization. As noted
by the IRS, if a contribution to a 501(c)(3) is earmarked for lobbying
efforts, it is not deductible as a charitable donation. Permissible
levels of lobbying expenditures are clearly specified for 501(c)(3)
groups that elect to come under the alternative lobbying criteria of the
Tax Reform Act of 1976.


When Goods and Services are Involved

A payment to a charity qualifies as a deductible gift only to the extent
that it exceeds the fair market value of the privilege or benefit the
"donor" receives in return for that gift. For example:

* One cannot deduct the full amount paid to a charity for such items as
candy or magazines. If the charity charges $10 for a box of candy that
normally sells for $8, only $2 can be claimed as a charitable
contribution.

* The purchase price of tickets to a fund raising dinner, circus, or
other meal or entertainment event is not fully deductible. Only the
portion of the ticket price above the value of the meal or entertainment
can be deducted for income tax purposes. The same rule applies even if,
at the suggestion of the soliciting organization, the donor decides to
let the charity give his or her tickets to underprivileged or disabled
children.

Likewise, even if the charity refers to the entire purchase price as a
"donation," the portion of the price that reflects the value of the
admission is not deductible.

* Membership dues that merely cover the cost of privileges or benefits
received by the "donor" are not deductible. However, "dues" that actually
constitute a contribution for which the donor receives little or no
privilege or benefit of monetary value in return are deductible.

* The price of participating in a raffle or similar drawing cannot be
deducted as a charitable donation.