Fundraising Events — Board Guidance — Automate the Cloud Inc.

A practical checklist for the Board before running a fundraising event (silent auction, bake sale, benefit, sponsored run, etc.). Fundraising is permitted under the Articles (Article II, Pillars 4–5) and the Bylaws; this guidance keeps events compliant.

1. Authorization

• [ ] The Board approves the event (date, purpose, budget, who runs it).
• [ ] Proceeds designated for an exempt purpose (e.g., the scholarship fund).

2. Keep it exempt-tax-clean (UBIT)

Occasional, volunteer-run fundraising is generally not taxable unrelated business income, thanks to three exceptions:

• Donated-merchandise exception → sales of donated items (e.g., a silent auction of donated goods) are not taxed.
• Volunteer-labor exception → activities run substantially by unpaid volunteers (e.g., a bake sale) are not taxed.
• Not-regularly-carried-on exception → occasional events (an annual auction) are not a "regular business."

Keep events occasional and volunteer-run. A frequent, ongoing commercial operation (e.g., a standing weekly storefront) could create taxable income and "commerciality" concerns.

3. Watch the $50,000 gross-receipts ceiling

• Gross proceeds (total taken in, not net) count toward the Corporation's annual gross receipts, which keep it Form 1023-EZ / 990-N eligible. Track running totals.

4. Charitable-solicitation registration

• [ ] File the KY Attorney General "Notice of Intent to Solicit" before soliciting (see `04-state-local/state-and-local-registrations.md`). A public fundraiser is solicitation.

5. Kentucky sales tax (do NOT assume you're exempt)

• The Corporation's purchase exemption (Form 51A125) covers purchases, not sales.
• KY generally taxes fundraising-event sales (auction items, merchandise, admissions) beyond a ~$1,000/calendar-year de minimis; beyond that, register for a sales/use tax account, collect, and remit.
• Raffles/games of chance are regulated separately (KY Dept. of Charitable Gaming) — may require a license.
• [ ] Confirm current treatment with the KY Department of Revenue before the event (details + sources in `04-state-local/state-and-local-registrations.md`, §5).

6. Donated items (in-kind gifts)

• Items donated for the event are in-kind gifts under the Gift Acceptance Policy: goods ≤ $1,000 auto-accepted; over $1,000 require Board/independent-director review before acceptance; non-cash gifts over $5,000 need a qualified appraisal (Form 8283).

7. Receipting bidders and buyers (quid pro quo)

• Silent auction: post each item's fair market value (FMV). A winning bidder may deduct only the amount paid in excess of FMV as a charitable gift; disclose this for payments over $75 (Gift Acceptance Policy §9).
• Bake sale / merchandise: buyers paying roughly retail receive no deduction (a purchase, not a gift) — no charitable acknowledgment of value is given.

8. Handling the money

• Deposit proceeds to a Board-approved account; disbursements over $1,000 need a second independent signer (Bylaws § 7.3).
• Scholarship awards funded by the event follow the Scholarship Policy (objective, nondiscriminatory, no insiders).

Before each event

• [ ] Confirm the current Kentucky sales-tax treatment for the event's sales with the KY Department of Revenue.
• [ ] The Board reviews this guidance and the applicable policies.