Open Forum

I'm seeking opinions about the tax-deductible component of museum memberships.  We have long operated by a rule of thumb that "all but $50 of any level of membership" is tax deductible, on the assumption that benefits are "goods received" and need to be accounted for.  I'm starting to see examples of memberships that are entirely tax deductible.  That's an appealing offer, of course, as it's simpler for our organization and a better deal for patrons, but I want to stay on the right side of tax laws.  Does anyone have experience with this in either direction? 

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Robin Sarratt
Vice President
LancasterHistory.org
Lancaster PA
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As an experienced fundraiser, I'd be hesitant to make a membership entirely tax deductible. It will mostly depend on what members receive as benefits for the membership and how those benefits are valued. For example, if the member receives free admission to an event where they eat the food and drink the wine, they are receiving a concrete benefit that has a monetary value. However, if the "membership" is just in name only and is a means of supporting the organization, a case could be made for the whole thing being tax deductible. The IRS is pretty clear on this and offer good guidance in the following: 

https://www.irs.gov/pub/irs-pdf/p1771.pdf

Top Eight Tax Tips about Deducting Charitable Contributions

https://www.irs.gov/pub/irs-pdf/p526.pdf


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Angie Albright
Director
Clinton House Museum
Fayetteville AR
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Original Message:
Sent: 04-04-2017 10:24 AM
From: Robin Sarratt
Subject: Tax deductible component of membership

I'm seeking opinions about the tax-deductible component of museum memberships.  We have long operated by a rule of thumb that "all but $50 of any level of membership" is tax deductible, on the assumption that benefits are "goods received" and need to be accounted for.  I'm starting to see examples of memberships that are entirely tax deductible.  That's an appealing offer, of course, as it's simpler for our organization and a better deal for patrons, but I want to stay on the right side of tax laws.  Does anyone have experience with this in either direction? 

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Robin Sarratt
Vice President
LancasterHistory.org
Lancaster PA
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In my former role with a large transportation history museum membership program, we were able to state that a membership was entirely tax deductible if the only benefits offered/received were free museum admission and a newsletter (for the latter benefit, ours was focused only on the museum's collections, exhibitions and goings-on, and not publicly available for sale at a stated cover price or via subscription - that matters too). The tax deductibility applied even if we offered discounts off ticketed special events to these same members. It's that concept of "not directly offering something tangible or of a concrete value in exchange for a contribution."

Indeed once you begin to include tickets or invitations to anything significant - a members-only dinner event, a benefactor's lunch, tickets to a fundraising event, a subscription to a magazine, a special tour of another museum that involves shuttle expenses or similar - then you will need to calculate the fair market value of those benefits and deduct them from the value the donor can claim. Invitations to an opening reception or similar probably do not count in this equation, especially if the primary expenses of the related exhibition are supported through grants and/or sponsorships, and if non-members (such as local elected officials) are included among the invitees.

This can be a tricky area, of course, and different jurisdictions can invoke different standards. Good luck!

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Paul Hammond
Executive Director
March Field Air Museum
Riverside, California
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Original Message:
Sent: 04-04-2017 10:24 AM
From: Robin Sarratt
Subject: Tax deductible component of membership

I'm seeking opinions about the tax-deductible component of museum memberships.  We have long operated by a rule of thumb that "all but $50 of any level of membership" is tax deductible, on the assumption that benefits are "goods received" and need to be accounted for.  I'm starting to see examples of memberships that are entirely tax deductible.  That's an appealing offer, of course, as it's simpler for our organization and a better deal for patrons, but I want to stay on the right side of tax laws.  Does anyone have experience with this in either direction? 

------------------------------
Robin Sarratt
Vice President
LancasterHistory.org
Lancaster PA
------------------------------