Taxpayer asks:
A friend of mine asked me to buy an ad in a book for her daughter’s beauty pageant. She claims that it is tax-deductible. I didn’t think that beauty pageants were charities, so how is this true?
Taxgirl says:
This question turned out to be far more complicated than I thought – even for a former pageant girl like me. That’s right, here’s what you didn’t know about me: I can sing “Supercalifragilisticexpialidocious” with the best of them.
My immediate reaction was that the organizations must be targeting businesses for sponsorships. In that way, buying an ad in a promotion booklet or putting your name on a banner, would be deductible as a promotional – not a charitable – expense. I’ve talked about that before as it relates to sponsoring sports teams and the like. I know all about that kind of sponsorship – I had the dubious honor of being sponsored by a used car dealer, who also happened to be my grandfather, during my pageant years (cause nothing says “beauty queen” like used cars).
For kicks, I decided to search for the particular pageant name in the email (which I purposefully omitted) in the IRS database. Boy, was I surprised. That particular pageant was not listed but more than fifty other pageant-related organizations have been given tax-exempt status by IRS. Since I understand that some pageants are scholarship pageants, I decided to Google one or two on the list to see what kinds of charitable services these pageants provide. Some of them have no apparent connection to charitable giving or charitable missions other than “to give girls and women a chance to be all they can be & learn valuable skills while competing and having a great time!” Besides the odd reference to the Army, I’m a little baffled as to how that meets the criteria of a charitable organization…
But in defense of pageants (because you had to know it was coming), not all pageants are like Toddlers and Tiaras on TLC. Many of them really do provide a chance for young girls and women to finance their educations, promote charitable work and service to the community, and otherwise be good ambassadors to the community. It’s not really fair to paint them all with a broad brush without knowing the specifics.
So here’s my advice: if you’re not sure whether a pageant (or any organization for that matter) qualifies for charitable status, ask the organization for proof of status or search the IRS database before making a donation if you are concerned about the tax deductibility.
And here’s even better advice: organizations can be granted tax-exempt status for all kinds of reasons. That doesn’t mean that you have to support them. If you don’t feel comfortable giving an organization your dollars, even if they have charitable status, then don’t. Trust me when I say that there are many other organizations out there who would love to have your dollars: spend them wisely.
Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.
If you make a personal charitable contribution in exchange for an ad in a program book, are you not receiving something of value in return which would reduce the amount of the gift that’s deductible? How would an organization or donor calculate the value of that ad?
Or is it merely their form of donor recognition, which wouldn’t have an impact on whether or not the gift is fully deductible? Even if it’s a picture of your friend’s daughter with a message like “Good Luck Tyffini! Your friend, EZ Mark”?
Thomas T,
Assuming that it otherwise qualifies as a charitable donation, I think it would matter what you said. If it’s a “good luck” ad, I would say the actual value of that is de minimis – you’re clearly not get a tangible benefit from that ad. It’s all warm fuzzies.
If you’re a business, different story – I think IRS could argue that you’re getting the actual benefit of the ad. In that event, I’d chuck the charitable donation altogether and call it promotion, like advertising in the Yellow Pages.