The Internal Revenue Service maintains that donors must subtract the value of any "substantial benefits" they receive from the amount of their gifts before they can claim tax deductions. It's the donors' job to make that adjustment--but it's a fund raiser's job to put disclosure statements on a solicitation. (MLW)

Affinity-group marketing--selling credit cards or insurance to people who have a lot in common, such as alumni--is booming. The IRS's case for taxing profits from credit card and insurance plans is discussed. The vehicle for collecting taxes would be the UBIT--the tax on unrelated business income. (MLW)

The Postal Service is auditing and trying to collect back postage from nonprofit organizations, including alumni associations. Although the post office initially accepted the materials in question for mailing, it now says alumni associations illegally loaned their permits to commercial firms such as travel agencies. (MSE)

Charities have an obligation to give donors "accurate and sufficient information concerning the deductibility of contributions." Donors must subtract any benefit of "substantial value" from their gifts. The value of a benefit is based on its fair market value, not on its cost to the charity. (MLW)

The IRS argues that income from alumni associations group life and medical insurance policies is business profit, not tax-exempt contributions to its member associations. The unrelated business income tax (UBIT) is described. (MLW)