FOR-PROFIT ENTITY RECEIVES AND SELLS CARS USING CHARITY’S NAME

In this program, the charity grants a for-profit entity the right to use the charity’s name for the purpose of soliciting donations of used cars. The charity receives either a flat fee or a percentage of the proceeds from the sale of the cars to support its charitable programs. The charity has no control over the for-profit entity’s activities. Unlike the preceding programs, the charity has not established an agency relationship with the for-profit entity that is valid under applicable state law; therefore, this program is not the charity’s program. Because the forprofit entity is not an agent of the charity, the donors’ contributions are made to the for-profit entity and are not treated as made to the charity. A charity cannot license its right to receive tax-deductible contributions. The for-profit entity and the charity must not mislead the public by stating that contributions may be deductible (for example, by providing a written acknowledgment that the "contribution" is deductible). Misleading the public in this regard may expose the for-profit entity and the charity to adverse tax consequences.