Chapter, house corporation and foundation

This is the question chapters get wrong most often, and they get it wrong in the direction that is embarrassing rather than the direction that is safe: telling a donor their gift is deductible when the entity receiving it cannot offer that.

The three entities

The chapter. Collegiate chapters are commonly organized under a part of the code covering social and fraternal organizations rather than as public charities. That status is real and legitimate, and it generally does not let a donor claim a charitable deduction for a gift to the chapter.

The house corporation. A separate entity, usually alumni-run, holding the property. Its status is its own question and is frequently different from the chapter's.

An affiliated educational foundation. Many inter/national organizations have one, and it is typically the entity with public-charity status. It usually supports specific purposes — scholarships, leadership education, educational portions of a house — rather than general chapter operations.

What this means for an auction

Decide before the page goes live: which entity receives, and what will you tell a bidder or a donating business? Then write the answer in one sentence on the auction page and in every acknowledgement.

• If the chapter receives and is not a public charity, say that a purchase is not deductible as a charitable contribution. Businesses may still have another route for it, and that is their accountant's question rather than yours
• If the money is raised for an outside philanthropy, consider whether that organization should receive directly — it usually can receipt, and it removes the question entirely
• If an educational foundation is involved, its purposes are narrower than the chapter's, and you cannot route general operating money through it because the deduction is convenient

Fair market value, if the receiving entity is a charity

Where a qualifying charity receives, a bidder may generally deduct only the amount paid above an item's fair market value, and you are required to disclose that value at the time of the transaction. Put it on every item page — it also gives bidders a reference point to bid past.

Money moving between the three

If the chapter raises for something the house corporation will buy, or the foundation holds funds for a chapter purpose, those transfers have their own rules and their own paperwork. Agree the route before the auction rather than after, and get it in writing from whoever advises the house corporation — the alumni board usually has someone who knows.

Raising for an outside philanthropy

The cleanest structure most chapters can use: the philanthropy partner receives the money and issues the receipts, the chapter runs the auction and takes the credit for organizing it. Fewer entities, no ambiguity for donors, and the partner will usually help promote it — which is worth more than the administrative convenience.

Agree in advance how the funds transfer, what the partner will say publicly, and whether the chapter's name appears in their acknowledgements.

General information, not tax or legal advice for your chapter. Structures differ by organization and campus and they change — check your own chapter documents, your headquarters and your Greek life office before acting on anything here.