There are two primary types of revenue that will likely be generated by a sponsored project: charitable contributions and program revenue.
Charitable Contributions
Charitable contributions are donations of money or other gifts made to a qualifying 501(c)(3) organization without goods or services being received by the donor. Such gifts are potentially tax-deductible to the donor.
Program Revenue
Program revenue is any money raised by a charitable organization as a result of the ongoing sale of goods or services that are directly related to the organization’s charitable purpose. Examples could include ticket sales to a museum or participation fees charged for a youth sports team. The expenditure of funds deemed program revenue is NOT tax-deductible for the spender, since something of value is received in exchange for the money.
How The Difference Impacts Compass Charitable Partners and Their Sponsored Projects
Only charitable contributions are under the direct oversight of Compass. In order for a donor to receive tax-deductibility, donations must be made payable to Compass Charitable Partners designated to the benefit of a sponsored project. There is no need for a sponsored project to route program revenue funds through Compass. Each project is encouraged to deposit all program revenue directly into their project bank account.