What should corporate foundations and the parent company consider when purchasing tickets to fundraisers?
Whether they are tickets to a dinner, to a performance or simply for general admission to a facility, tickets have an economic value. When a company or foundation purchases tickets, the first issue to consider is which entity is purchasing the tickets-the foundation or parent company? If the parent company purchases the tickets, there is no concern about which individuals use the tickets. For this reason, the easiest way to handle the purchasing of fundraising tickets is to make the purchase through the corporate giving program.
If the corporate foundation purchases the tickets, the foundation must consider who uses the ticket. The basic rule is this: self-dealing rules bar disqualified persons (e.g., executives and board members of the parent company) from receiving tangible economic benefit as a result of foundation grants. Thus, even though it may be for a good cause, the corporation and its managers generally may not use tickets purchased by the foundation or other admissions provided on account of the company foundation grants. However, if a company executive is also a foundation board member, he or she may attend for reasons associated with their foundation work such as monitoring a grantee. Spouses and other family members cannot attend using foundation purchased tickets unless they, too, have legitimate foundation responsibilities.
In addition, foundation representatives, who are disqualified persons, may attend events that the corporate foundation has underwritten, so long as their attendance is reasonable and necessary to their performance of functions related to the foundation. For example, a foundation manager may use a ticket for the purposes of monitoring the work of an organization.
Finally, foundations may be asked to split the cost of tickets to events, with the foundation paying the charitable portion and the company paying the noncharitable portion of the ticket price. The IRS has taken the position that is not possible to split the price of a ticket in this manner to avoid that self-dealing prohibition.
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