Whether a sponsorship is deductible depends on what the sponsor gets in return. Redswing does not decide it and does not give tax advice.
Draft for legal review: This article describes how Redswing works in plain language. It is not tax or legal advice and an attorney has not reviewed it yet. Ask your tax advisor or attorney about your own situation.
Overview
Sponsors often receive something of value, such as signs, logo placement, playing spots, or meals. That can change how a payment is treated for tax. Your organization and the sponsor's advisor decide.
Two separate questions can come up, and both are for advisors:
- For the sponsor: a business may treat a sponsorship as a business expense rather than a gift, and any golf, meals, or tickets they receive can reduce what counts as a gift. The IRS notice rules for payments over $75 can apply to that part.
- For your organization: the IRS treats a simple thank-you (name, logo, website) differently from advertising (prices, endorsements, "best in town" claims). The IRS calls the first kind a "qualified sponsorship payment." How you word sponsor recognition can matter for your organization's own taxes.
What Redswing generates for sponsors
- The Tax receipts letters cover registrations, donations, and auction wins. They do not include sponsor payments today.
- The sponsor impact report from the Sponsors tab is a recap for the sponsor, not a tax document. See AI sponsor-impact reports.
- Your own organization can write its own acknowledgment letter to a sponsor. Ask your advisor what it should say.
What to tell a sponsor who asks
- Say that the answer depends on the benefits they receive and on their situation.
- Offer to list the benefits they get in their tier, such as signage and recognition. The tier details are on the Sponsors tab.
- Suggest they talk to their tax advisor. Do not tell a sponsor that the payment is or is not deductible.
Things to know
- Do not state a deductible amount for a sponsorship unless your advisor has given you the number.
- Direct donations are separate and are handled in letters. See Sending tax-deductible receipts.