Almost all nonprofit organizations have web sites that they are using for a variety of activities, fund raising being one of them. In general, we advise our clients to limit the use of the term “advertising” and instead focus on requesting “program underwriting” from corporations and acknowledging that underwriting support by mentioning the company on the organization’s website.

Payments received by nonprofits from corporations may be nontaxable sponsorship revenue or taxable advertising income. The key is whether the content of the recipient’s acknowledgment of its corporate benefactor stays within acceptable guidelines. There is a fine line between what is considered advertising in the nonprofit world and what isn’t. The IRS has provided specific guidance on this, specifically addressing acknowledgments that nonprofits place on their websites. An exempt organization is deemed to have simply acknowledged a sponsor if it merely includes the sponsor’s internet address (including a hyperlink) on its website. However, if there is a hyperlink to a sponsor’s website where there is an endorsement of the sponsor’s product by the exempt organization, the endorsement is considered advertising.

The key to our suggested “underwriting acknowledgments” is to remember that the nonprofit cannot endorse, compare or otherwise make a qualitative comment about a company’s product or service. Nonprofit Public Television provides the best example of underwriting acknowledgments that contain the name and logo of the sponsor along with the sponsor’s tag line (Ex: Home Depot – “your home improvement store”) without any further endorsement.

It is perfectly allowable to include an underwriter’s logo and link to their website on your nonprofit website as long as the nonprofit organization does not endorse the company or its products.

For more information on advertising or questions about your website staying within the allowable endorsement limit, please email us.

As one of the largest CPA firms in Boston, KLR is unique because they service over 220 not-for-profit organizations with compliance and consulting services. We have extensive experience helping Nonprofit organizations regarding boards, and board responsibilities, charitable contributions, taxes and 990 filing requirements. The KLR Nonprofit team is active in our local community and not-for-profit organizations, visit our Facebook page to see photos from our latest volunteer event.