A Qualified Sponsorship Payment is any payment by any person or entity wherein they will not receive any substantial benefit in return except for a use or acknowledgment. A Substantial Return Benefit is any benefit other than use of a name, logo, or product lines or an acknowledgment of the payment.
For example, if a local business donates $5,000 to be a sponsor of a charity’s annual fundraising dinner, and in return the charity posts the corporate name and logo on a sign that says, “Thank you to our sponsor, Acme Company!” that is a corporate sponsorship, which is nontaxable. However, if the sign says “Acme Company is the best at what they do! Thank you for your support!” then the sponsorship would be taxable.
