Advertising and Donor Recognitions on WWW

Advertising and Providing Donor Recognitions on the WWW

At the direction of the president of the university, a committee was formed to look at donor recognition and advertising on the www. Members of the committee included the following: Ron Schoenau, Leslie Bram, Pam Bernard (represented by Scott Cole), Jane Irvin, David Carlson, John Lester, Steve McClain, Mary Howard and Jack Battenfield, chair.

Background: While the “edu” domain does not prohibit advertising or donor recognitions on the www, an IRS “Private Letter Ruling,” dated June 6, 1997, states that advertising differs from a mere expression of recognition in that it may contain additional information about a donor’s product, services or facilities or functions as a hyperlink to the donor. This is translated to mean:

1. We can provide donor recognition on the www without a hyperlink.
2. If we provide a hyperlink, part of that gift becomes advertising and we must
   1. charge the donor for the advertising or deduct from the gift receipt the value of that advertising;
   2. recognize the portion of the gift representing advertising as unrelated business income and
   3. pay “unrelated business income tax (UBIT)” on that income.

The value of such an “ad” would be based on market value. An argument can be made that “links” are provided free and that almost all paid ads are for banners. The counter argument is no one would buy a banner without a link. Regardless, advertising rates are based on “hits” or “click throughs,” and the going rates seem to be from $17 to $50 per thousand hits. The average appears to be about $22 per thousand as of October 1997.

Committee recommendations: Based on the potential for advertising income and the concerns for donor relations, the committee recommends the following policy:

Donor Recognition — All university units must work with the Development Office (University of Florida Foundation) for the solicitation and recognition of gifts. The Foundation has expertise and services as well as a variety of mechanisms for donor solicitations and recognitions. Under current interpretations of federal tax law, donor recognition cannot include a hyperlink on a web page. A hyperlink is considered advertising with the value determined by the number of “hits.”

Advertising — Because of the numerous issues which arise in connection with the sale of advertising space on university homepages (using state resources, accounting and paying UBIT, for example), the committee recommends:

1. Only Direct Support Organizations and Auxiliaries will be eligible to accept advertising on their web pages with prior approval of the president or president’s designee.
2. Initially, only the University Athletic Association and UF Business Services may develop www advertising efforts until additional information is gathered based on their experiences and a university-wide policy can be established.*

* The campus radio stations which use a “.com” email address are excluded from these recoimmendations.