A school, team, studio, or business can request a PromoSpirit merchandise store. The type of payout depends on who receives it and what customers are told about their purchase. Use this guide before announcing a fundraiser.
Who can receive store earnings?
A charitable organization. To promote a sale as benefiting a 501(c)(3), provide the charity’s legal name, evidence of current status, and written authorization from the charity. A PTA covered by a parent organization can provide confirmation that its local unit is included. An EIN alone does not establish charitable status.
A public school or sponsored project. If a school district is the recipient, ask its business office who may sign and receive funds for the public purpose. If a qualified charity sponsors a project, identify the sponsor and provide its written agreement. The sponsor must control the charitable funds. A club cannot use another organization’s tax ID on its own authority.
A group or business without charitable status. A dance studio, club, or other identifiable payee may arrange to earn a share of eligible merchandise sales under a written commercial agreement. Describe the payment as store earnings or a sales commission. A payment to a group because other people bought shirts does not automatically qualify as a purchase rebate. The recipient’s tax treatment depends on the arrangement.
Store rebates for groups without 501(c)(3) status
An approved group or business that is not a 501(c)(3) may receive a share of eligible merchandise sales under a written commercial agreement. If the agreement calls this a store rebate, that means the agreed store earnings or sales commission. It is not a charitable donation to the recipient, and the name “rebate” does not make it tax-free.
These sales-based payouts are generally reportable income to the recipient unless an applicable exemption or exclusion applies. The recipient is responsible for keeping records, reporting income, and paying any taxes due, even if no Form 1099 is received. PromoSpirit may request tax information through a secure process and must issue any information returns required by law.
A genuine purchase-price rebate on the recipient’s own purchases can have different tax treatment. Earnings from other people’s purchases are not automatically that kind of rebate. A group’s lack of 501(c)(3) status does not by itself determine its tax treatment; other tax-exempt organizations and governmental recipients may have different rules. Confirm the payee’s status and reporting obligations with a qualified tax professional.
What does a shopper’s receipt mean?
A customer who buys a shirt at its ordinary retail price receives a merchandise receipt. The organization’s share of the sale does not give the shopper a charitable deduction. For example, if an eligible $30 shirt earns a studio 15%, the studio earns $4.50 and the shopper has purchased a $30 shirt.
A separately offered donation is a different transaction. Before giving, check the named recipient, how the money will reach it, any fees, and who can issue an acknowledgment. A merchandise order confirmation alone does not establish that a separate gift is deductible.
Before you promote a store
Identify the legal payee and the person authorized to sign. Agree in writing on the products that count, the amount or percentage per sale, the calculation after discounts and refunds, and the payout schedule. Confirm any campaign dates, cap, or minimum before mentioning amounts to shoppers.
Get written approval before using a charity’s name or logo or stating that purchases benefit it. California regulates certain online promotions tied to sales as well as direct appeals for donations. Opening a store or providing a determination letter does not by itself authorize a charitable campaign.
Questions about your group?
Email orders@thecreativepromo.com with the store name and intended payee. Ask for a secure way to provide any requested W-9, tax identification, or banking information. Your tax professional can advise how to report your organization’s payments.
Read the IRS charity lookup, IRS charitable contribution rules, IRS income and rebate guidance, IRS information on other tax-exempt organizations, California online fundraising requirements, and California commercial coventurer rules.