Fundraising Sales

This exemption applies to up to $20,000 in fundraising sales, regardless of the number of days you spend fundraising. (Before Jan. 1, 2015, the limit was $10,000.)

If you exceed $20,000 in sales, you must start charging sales tax on your fundraising sales at that point. No tax is due on the first $20,000.

Note: The limit does not apply to candy sales by a youth group.

This exemption applies to:

• All sales by a nonprofit organization that exists solely to provide educational or social activities for young people primarily age 18 and under.
• All sales by senior citizen groups that limit membership to persons age 55 or older and operate exclusively for recreation and other nonprofit purposes.

For purposes of the $20,000 limit, a “youth group” is an elementary or secondary school club, association, or other student organizations that is separate from the school district (or school) and exists to provide sports, educational, or other extracurricular activities.

Note: This exemption does not apply to admission charges or activities for which the money must be deposited with the school district treasurer under Minnesota Statutes 123B.49, subd. 2, or must be recorded in the same way as other school district revenues or expenditures under M.S. 123B.49, subd. 4.

Fundraising Example

• A youth group sells wrapping paper and raises $21,000. Since the sales are over $20,000, the $1,000 is taxable.

Fundraising not Subject to the $20,000 Limit

Some activities that qualify for this exemption are not subject to the $20,000 limit. These activities are:

• Candy sales for fundraising purposes by a youth group.
• Sales of tickets or admissions to a Minnesota golf tournament for the benefit of a tax-exempt 501(c)(3) organization. Note: This exemption does not apply to green fees, cart rentals, or other charges to golf participants.
• Sales where proceeds are contributed to a registered combined charitable organization (see Minnesota Statutes 43A.50) and the contributions will be used exclusively for charitable, religious, or educational purposes. Note: These sales are subject to the 24-day fundraising limit, described below.

Nonprofit organizations that have 24 days or less of fundraising events in a year qualify for this exemption. If your nonprofit organization qualifies for this exemption, you may sell otherwise taxable goods or admissions at fundraising events without charging sales tax.

Fundraising event means an activity that:

• Is of limited duration
• Is not regularly carried out in the normal course of business
• Attracts people for community, social, or entertainment purposes

Fundraising events do not include business operations that provide services or sell goods during regular hours, such as a bookstore, gift shop, or thrift store.

Examples of fundraising events include:

• Auctions
• Bake sales
• Concerts

All fundraising event days count toward the 24-day limit.

• Count any days when your organization makes only tax-exempt fundraising sales.
• If your organization has more than 24 days of fundraising events, the sales in the first 24 days are taxable retroactively. You must pay tax on those sales and charge tax on your sales for the rest of the year.

• If your organization takes orders for goods to be delivered in the future, only count the number of days when customer deliveries are made.
• If your organization sells tickets for admissions, amusements, or meals for a fundraising event, only count the days when the activity actually takes place.

Exemption Requirements

To qualify for this exemption, a nonprofit organization and its events must meet all of the following requirements:

• The organization must be a nonprofit that is organized and operated for charitable, religious, educational, civic, fraternal, and senior citizens’ or veterans’ purposes. None of its net earnings can benefit a private individual.
• All proceeds must only be used for charitable, religious, or educational purposes, minus necessary expenses for the event.
• The organization must keep separate accounting records for each fundraising event, including receipts and disbursements. All expenses must be documented.
• The organization cannot make sales as an active or passive agent of any for-profit organization or person. Otherwise, sales at that event are taxable and the event counts toward the 24-day limit.
• Starting July 1, 2017, the fundraising events cannot be held on premises that are leased or occupied for more than 10 days, but less than 30 days. Otherwise, sales at that event are taxable and the event counts toward the 24-day limit. Previously, the lease could not be over 5 days.
• The organization must bear the financial risk of the event and its net revenue from the event must equal or exceed the total state and local taxes that are exempted. Otherwise sales at that event are taxable and the event counts toward the 24-day limit.
• Charges for admission and use of amusement devices are taxable if the event has bingo or other gambling activities. The event counts toward the 24-day limit (see examples).

Examples

1. A nonprofit organization schedules two fundraising events a year that are seven days each and include bingo. The organization charges admission and sells meals at the events.
   • The admissions charge is taxable because one of the activities at the event is gambling (bingo). But the food sales are not taxable because they qualify for the 24-day fundraising event exemption.
2. A nonprofit organization sells pottery as part of its regular business activities.
   • These pottery sales are subject to sales tax.
3. A nonprofit organization also holds a fundraising event. Tickets for the fundraising event are $100, which entitles the buyer to a buffet reception and a gift of handmade pottery.
   • For income tax purposes, $50 of the $100 ticket price is deductible as a charitable contribution.
   • For sales tax purposes, ticket sales for the fundraising event are exempt if the nonprofit organization does not exceed the 24-day limit. (The fundraising exemption applies here because the pottery is a gift to the ticket buyer and the ticket price is for the buffet reception.)

Note: For purposes of this exemption, lawful gambling activities that occur on a regular basis are not considered fundraising events and do not count towards the 24-day limit.

Sales or leases of gambling equipment and supplies to organizations that conduct lawful gambling activities are taxable.

Items purchased to be given away as prizes that are won through lawful gambling or the state lottery are taxable when they are purchased.

A nonprofit organization’s income from gambling, such as bingo and pull-tabs, is subject to the state’s Lawful Gambling Tax. For more information:

• See Gambling Taxes. 
• Call the Gambling Control Board at 651-539-1900.
• Visit the Gambling Control Board website.