Q: If a non profit purchases tickets at a table for $60,000 and auctions the tickets for $100,000, are there legal issues?
A friend of mine has a chance to buy a 10 seat table at a very high profile celebrity event for $60,000. Since the event is invitation only it sells for well over $50,000 a pair. There would be 2 pairs of tickets auctioned. But the table isn’t donated, they would have to buy it. If the organization just bought the table and kept the profit, minus auction fees etc are there any issues they may come across? I know they would have to have the organization’s name on the table. Or could the organization have someone pay for their table and they just pay them back? Those are the two options.
Lawyers, want to be a Justia Connect Pro too? Learn more ›
- California
- (916) 704-3009
- View Profile
- Answered
A:
Under California law, a non-profit organization engaging in this type of transaction should be aware of certain legal considerations. Firstly, when a non-profit purchases tickets for an event and then auctions them at a higher price, the profits made from this transaction must be used in accordance with the organization's charitable purpose. The income generated should align with the non-profit's mission and objectives as stated in its bylaws and as required for maintaining its tax-exempt status.
If the non-profit is considering having an individual purchase the table and then reimbursing them, this could raise questions regarding the proper use of the organization's funds. It's important to ensure transparency and proper accounting practices in such transactions to avoid any appearance of impropriety or misuse of funds.
Additionally, when conducting an auction, the non-profit should comply with all applicable state and federal laws related to fundraising and auctions. This includes providing accurate information about the value of the auction items and any tax implications for the buyers.
In any of these scenarios, it's wise to consult with a legal advisor to ensure all activities are conducted in compliance with the law and in the best interest of the non-profit's mission. Keeping thorough records of all transactions and decisions made is also crucial for demonstrating compliance and accountability.
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.
