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§ 22.1 DISCLOSURE BY CHARITABLE ORGANIZATIONS IN GENERALin excess of value received and expects the charity to provide the donor withthat value. 9The third aspect of this is the payment to a charitable organization that is notdeductible at all. Obvious examples of this include payments of tuition toschools and payment for health care services to hospitals. Other types of thesepayments are dues, subscriptions, purchases made at auctions, and purchases ofraffle and sweepstakes tickets.The IRS conceded that there are no sanctions for violation of its disclosurerules. 10 There was, however, discussion of application of the aiding and abetting(and other) penalties, 11 and of potential litigation in this area. There also was discussionof the use of the unrelated income rules in this setting, 12 as well as of theoriesby which an organization’s tax exemption could be revoked for failure tocomport with these rules.In 1988, the IRS also began reviewing tax returns filed by individuals, lookingfor situations in which a charitable contribution deduction was being claimedwhen in fact only a portion or perhaps none of the payment was deductible as agift.Congress adopted legislation in 1988 requiring disclosure of nondeductibilityin the case of contributions to tax-exempt organizations that are not charitableones. 13 The report of the Committee on the Budget of the House of Representativesaccompanying this legislation contained a discussion of the problem fromthe standpoint of Congress, with the observation that the committee is “concernedthat some charitable organizations may not make sufficient disclosure, insoliciting donations, membership dues, payments for admission or merchandise,or other support, of the extent (if any) to which the payors may be entitled to charitabledeductions for such payments.” 14This discussion focused on “memberships” in a charitable entity, such as amuseum or library, for which the “members” receive benefits of some monetaryvalue (such as free admission to events for which others are charged, merchandisediscounts, and free subscriptions). The committee cautioned that some or allof these membership payments are not deductible as charitable contributions.The committee’s discussion also referenced payments to a charity that are notdeductible at all as charitable gifts, such as sales of raffle tickets and the auctioningof property or services. Concerning the amount paid as a winning bid at acharity’s auction, however, the analysis stated that the portion of the amount inexcess of the fair market value of the item or service received may be deductibleas a charitable gift. The discussion noted that some charities wrongfully implythat all such payments are fully deductible, while “many other charities carefully9 There is a statutory exception to this rule. When an individual makes a payment to or for the benefit of a collegeor university, which would be deductible as a charitable contribution but for the fact that the individual receivesthe right to purchase seating at an athletic event in the institution’s athletic stadium, 80 percent of thepayment may be treated as a charitable contribution. IRC § 170(l).10 Priv. Ltr. Rul. 8832003.11 See § 10.14.12 See § 3.5. The use of the unrelated income rules in the context of fundraising regulation is the subject of Hopkins,The Law of Fundraising, 3d ed. (John Wiley & Sons, 2002) (hereinafter Fundraising), § 5.7.13 See § 22.4.14 H.R. Rep. No. 100-391, 100th Cong., 1st Sess. 1607 (1988). 607