Recent presidential impeachment hearings have raised the Latin phrase quid pro quo to national attention. What does it mean? The literal meaning of quid pro quo is “something for something.” Put differently, a quid pro quo exists when something is given in exchange for something else. In Thanksgiving parlance, quid pro quo may mean a person better bring a dish (or two) to share at the holiday table! For nonprofits, this term applies to charitable contributions and payments for goods and services, with critical distinctions affecting tax deductibility, tax receipting, and potential “private benefit” tax issues. This article provides a helpful primer on these important tax issues with a special holiday spin.
“Got milk?” This phrase may instantly bring to mind a famous campaign to promote milk consumption. This PR campaign was promoted by a trade association dedicated to—what else—selling milk! How could tax-exempt status belong to a group of businesses? The answer is through Section 501(c)(6) of the Internal Revenue Code, which provides exemption for “business leagues”—commonly known as trade associations—as well as chambers of commerce, real estate boards, boards of trade, and sports leagues. Here are some basics about trade associations.
Encouraging news: Two separate courts recently struck down New Jersey and New York laws requiring mandatory disclosures of donors to nonprofit organizations, affirming First Amendment rights over purported government interests in donor information. These decisions build on both the Trump Administration’s efforts to curtail Section 501(c)(4) donor disclosure requirements and Americans for Prosperity’s ongoing challenge to California’s donor disclosure law applicable to Section 501(c)(3) public charities.