<p>I'm almost certain we've discussed this before, but I couldn't pull anything up in a search. Here's the story: D3 and some friends are planning a benefit concert with proceeds to go to a recognized charity. She's been setting up a website and just opened a "business" bank account to handle the donations (I believe they are accepting online donations via paypal and are asking for a donation at the door). </p>
<p>What does she need to do in terms of tax liability? Does she need to register as a 501(c)3? Does she need to pay taxes on the donations? Report them to the IRS in any way? Offer receipts to concert goers? (Can you tell I'm a complete newbie to this world??!)</p>
<p>Any advice on organizing the performance etc would be gratefully accepted. :)</p>
<p>To get the 501c3 benefit, where people donate to the concert, people who donate time, money and materials, can take tax breaks means filing with the IRS, and it isn’t that easy, there are rules about non profit orgs that involve what they need to be legal…</p>
<p>On the other hand, if you do a benefit concert and the proceeds all go to charity, then I believe you don’t have to do any filings as such (I could be wrong), and there could be local law involved, too,so it is wise to check. </p>
<p>The IRS has a helpline and their website has information about charitable events and such, might be worth checking out. I would hope the idiots and the lawyers haven’t made it difficult that kids who want to do something good can’t do it, but I suspect in this case what your D is doing is fine,.</p>
<p>We’ve done a lot of benefit concerts. The problem with accepting checks is that you need to have them made out to the charity itself, not the kids, which means that whoever is doing the gate for your event needs to make sure that’s what they write on the “to” line of the check. This was a problem for us in the past, and meant that we had to decide whether to contact the donor and ask for a fresh check, or to deposit it and then write a new check to the charity. </p>
<p>If you are collecting online donations you should probably get a fiscal sponsor like Fractured Atlas or The Field. My daughter is involved with a charity that uses a fiscal sponsor. I don’t know it it is all right to link to the website they made for the charity, but if you Google “fiscal sponsors” you can find out more about them. It would be very complicated to set up a 501c3.</p>
<p>[Edit] Another reason for having a fiscal sponsor would be to enable them to use one of those “Square” attachments to a phone to accept donations at the gate. I’ve not tried this yet but I really need to set it up for the next event we do, as many people walk up the gate expecting to use a credit card.</p>
<p>Applying for 501c3 status is very cumbersome.</p>
<p>Is this a very local, small event? </p>
<p>Kids in our town have done benefits and just taken cash at the door. A separate bank account is not a bad idea. But our kids kept it really simple: the cash at the door was taken to the bank the next day, converted to a cashier’s check, and sent to the charity.</p>
<p>I certainly hope the copy attached to the cashier’s check was kept. I don’t know how bookkeeping was handled: my kid was not in charge, and just performed. But I do know that overall, they just kept it simple.</p>
<p>If the benefit is in a city, or is raising a great deal of money, then that would be different, but I guess the kids in our town did it almost like a lemonade stand. A church donated space. I do think they raised something like $1,000 back when Katrina hit New Orleans.</p>
<p>Thanks for the (excellent) advice! The only person who knows less about this than my daughter is me, so I’m taking notes and sending all this off to her. This is probably going to be a relatively small event, so “less is more”!</p>