Page 188 - Washington Nonprofit Handbook 2018 Edition

e. Exemptions and Deductions for Fundraising Activities

(i) Generally

Washington allows certain nonprofit organizations, as defined below, to
deduct income received from a qualifying fundraising activity under the B&O tax.
See RCW 82.04.3651. In addition, the nonprofit is not required to collect the retail
sales tax on sales made as part of the fundraising activity.

“Fundraising activity” means activities involving both the direct solicitation of
money or other property and the anticipated exchange of goods or services for
money between the soliciting organization and the organization or person solicited,
for the purpose of furthering the goals of the nonprofit organization.

A fundraising activity does not include the operation of a regular place of

business in which sales are made during regular hours such as a bookstore, thrift
shop, restaurant or similar business. It also does not include the operation of a
regular place of business from which services are provided, such as retail, personal,
or professional services.

“Nonprofit organization,” for the purpose of the fundraising activity
exemption, means one of the following:

• An organization exempt from tax under section 501(c)(3), (4), or (10) of
the Code;

• A nonprofit organization that would qualify for the exemption except
that it is not organized as a nonprofit corporation; or

• A nonprofit organization that meets all of the following criteria: (1) the
members, stockholders, officers, directors or trustees of the
organization do not receive any part of the organization’s gross
income, except as payment for services rendered; (2) the
compensation received by any person for services rendered to the
organization does not exceed an amount reasonable under the
circumstances; and (3) the activities of the organization do not include
a substantial amount of political activity, including, but not limited to,
influencing legislation and participation in any campaign on behalf of
any candidate for political office.

WASHINGTON NONPROFIT HANDBOOK -177- 2018