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What are you providing to the person making the donation and what is the "cause" that money goes to? How much of the money collected is going to the "cause"? Is the cause a tax exempt non profit?
Usually it would be in exchange for any transactions the people we send to them result in. So almost like an affiliate arrangement or marketing agreement that is based on results. The cause would be a group like the Red Cross, or Feed the Children - a large, well-known, well-established, tax-exempt charity. 50% will go to the cause.
What is the value of your services if it was provided unconnected to any charitable cause?
The value is that they get more clients, usually at a more efficient rate than they'd currently be getting. Basically, we analyze their marketing, figure out how much they are currently spending on marketing, and then they make the "donation" which would be less than what they are currently spending - make sense?
As I understand you provide a marketing analysis and a portion of the cost of your services goes to the "cause" is that correct?
You would have to disclose what portion of your fee went to the "cause" and only that amount would be a tax deductible donation. You cannot claim that the total fee is a donation.
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Ok, one more question, does this rule change if the group doing the analysis is a "council" or other community organization, rather than a business?
No. The council would be providing services for fees which is ordinarily taxable income.
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