AVSN: Sponsorship & Tax Deductions
Deductible Gift Recipient endorsementSome non-profit organisations enjoy the benefit of being endorsed by the Australian Taxation Office (ATO) as a Deductible Gift Recipient (DGR). This allows donors to make income-tax deductible donations (gifts) to the recipient. This donation must be given freely and without any reward from the recipient to be considered a "gift" by the ATO.
It is important to note that not all non-profit organisations are charities and not all charities meet the criteria for DGR endorsement. A non-profit organisation that is also a charity may qualify for income-tax exemption yet fail to meet the more stringent criteria for DGR endorsement.
The Australian Vaccination-Skeptics Network (as Australian Vaccination Network) has applied many times to the Australian Taxation Office (ATO) for DGR endorsement. The ATO has repeatedly denied them this because the AVSN fails to meet the criteria for a health promotion charity, mainly "promoting the prevention or the control of diseases in human beings."
SponsorshipAccording to the ATO, sponsorship is described as:
Under a sponsorship arrangement, when an organisation undertakes a fundraising activity it often receives support in the form of money. In return, it may provide such things as advertising, signage or naming rights or some other type of benefit of value.
This means that the sponsor receives something of value in return for the sponsorship, so the sponsorship payment is not a gift. If the organisation is registered for GST, it has to pay GST on the sponsorship it receives.
In complete contrast to a tax-deductible gift, sponsorship MUST contain a tangible benefit to the donor or some other type of commercial value. A sponsorship payment may be claimed by the donor as a business expense and is considered assessable income for non-charitable non-profit organisations.
Sponsorship is most commonly seen in the form of naming rights, especially at sporting events. The "Westpac" Rescue Helicopter Service is another example.
2009As a way of attracting income that would be a tax-deductible expense for the donor, in 2009 the AVSN began offering sponsorship packages for businesses.
The sponsorship packages offered by the AVSN in 2009 all contained
some items of value, such as membership, t-shirts, magazine subscriptions or
advertising, and the AVSN
advertisement also stated the tax-deductible value of the package (refer
AVSN Enews June 2009).
All items of value in these sponsorship packages were products that had always been available to be purchased separately from the AVSN. I strongly doubt that using sponsorship with the sole intent of side-stepping an inability to obtain a DGR endorsement would be deemed acceptable by the ATO and this may be further compounded by the AVSN only offering its normal products as the value items.
The AVSN posted sponsorship income of $19,394 in its 2009 Annual Statement.
2010In August 2010 the AVSN sent out newsletters asking for sponsorship. In this instance they didn't specify a particular amount, they failed to offer any tangible benefit or offer anything of commercial value to the donor, and misleadingly referred to sponsorship as a donation. As outlined earlier in this post, sponsorship is not a donation. Here is the excerpt of the newsletter about sponsorship:
If you have a business however, and are in a position to donate a larger amount - say $10,000 to $20,000 - and this donation can be given as sponsorship so it will be tax-deductible, then we want to know about it.Note: the AVSN was asking for pledges only at this time, with payment to be made later.
The AVSN was also selling three sponsorship packages in its online shop - $500, $1000 and $2500.
The AVSN posted sponsorship income of $7,609 in its 2010 Annual Statement.
2011 & 2012The AVSN renamed its sponsorship packages to "Advertising Packages" in its online shop.
The AVSN posted sponsorship income of $55 in its 2011 Annual Statement.
2013On 28 June 2013, the AVSN published a newsletter and once again asked for sponsors. Here is the excerpt:
End of Financial Year
2 days left for Tax-Deductible Sponsorships
For those members who own businesses or practices, you can make your donation tax-deductible by claiming it as sponsorship. The AVN has several up-coming initiatives to protect your rights and we would love to be able to say that you were one of the sponsors of these events / actions.
Please check with your tax advisors before giving to the AVN, but if you are advised that you will be able to claim your sponsorship on your tax, then your assistance would be greatly appreciated. You can just choose to donate any amount and then, send us an email to state that this is a sponsorship payment. When you send us that email, please ensure that you tell us the business name you'd like the receipt made out to.
It is highly unlikely that sponsorship as described in the above newsletter is acceptable. No details are provided about these "up-coming initiatives" (who is to say they will ever exist) and "we would love to be able to say" is about as vague as you can get - what tangible benefit is being offered to the donor, what is the commercial value of what's being offered?
The unprofessional and potentially misleading manner in which the AVSN is seeking these funds is disgraceful. I have to wonder if the disclaimer "check with your tax advisor before giving to the AVN" is adequate in these circumstances.
Another area of concern is how these payments are to be made. According to the newsletter, sponsorship payments are to be made into the same account as that given for general donations, and the only way the AVSN can separate the two is the donor sending an email. I think a separate account for sponsorship payments, or at least a requirement for a donor to complete a sponsorship form, is warranted.
The AVSN has a long and sordid history of financial mismanagement and misleading its consumers. From failing to spend a single cent of fundraising income on the purpose of its appeals, to scamming hundreds of thousands of dollars in selling magazine subscriptions it knew it would not supply, to dubious and misleading entries in its annual financial statements and intentionally misleading Fair Trading in regard to its financial affairs, it is high time that Fair Trading and the Australian Taxation Office send in the auditors.
Posted: 29 Jun 2013