Posted: 2/13/01; 11:33:58 AM 
There were a lot of visitors to this website in the period leading up to the IRS deadline, but only a couple of people commented here. This document lists the IRS questions that got responses, and quotes the responses in full; there were some questions that no-one commented on at all which are not repeated here.
As promised, the text below was sent to the IRS office working on this topic on February 13, 2001.
In the future, this website will be used for seeking comments on other issues of importance to the nonprofit sector.
Thank you for your interest,
Putnam Barber
Q: Does a website constitute a single publication or communication? If not, how should it be separated into distinct publications or communications?
Putnam Barber: Generally, it would seem to me that the navigation aids and site structure would suggest reasonable boundaries for dividing a website into parts. "Pages" don't help much now, and will I suspect become less and less important as dynamic ways of presenting web content become more prevalent - how many pages, for example, does Google (http://www.google.com) have?
Q: When allocating expenses for a website, what methodology is appropriate? For example, should allocations be based on webpages (which, unlike print publications, may not be of equal size)?
Putnam Barber: The issue about allocation of costs will arise when the website includes elements that cannot properly be classified as program services.
Q: An organization that creates a website with elements that generate Unrelated Business Income (from, for example, sales of merchandise unrelated to the mission) will want to track costs related to the development and management of those elements carefully to substantiate entering expenses on their 990-T.
Putnam Barber: An organization that makes substantial investments to include facilities for fundraising on its website will need, again, to track the costs of doing so carefully so as to enter them in the proper column of Part II (Statement of Functional Expenses) on the 990.
If there are parts of the website created and managed solely for administrative purposes -- an example might be a custom-built facility of recording usage -- the related expenses should also be recorded for reporting purposes.
If a nonprofit contracts with an online service provider to collect and process donations on its behalf, the fees the provider charges are propoerly fundraising expenses, but I don't think it makes any sense to try to identify the separate costs of having a "donate now" button and link on one or more of the organization's own webpages. Unless those pages have been specifically designed as part of a fundraising campaign, the extra cost of inserting the button is so small as to be irrelevant for the purpose of reporting functional expenses.
Q: Unlike other publications of an exempt organization, a website may be modified on a daily basis. To what extent and by what means should an exempt organization maintain the information from prior versions of the organization's website?
Putnam Barber: It should not be necessary to maintain any sort of record or copy of routine program-service webpages.
Webpages created to influence the passage (or defeat) of legislation (that fit, in other words, the tax-code's definition of "lobbying" in one or another sense) represent a special case. The organization will certainly need to keep track of the costs of creating and maintaining them consistent with the requirement that lobbying expenses be reported. It would probably be a good idea to keep copies of the actual pages in either paper or electronic form as well, in order to substantiate their character in the event of a question.
Webpages can of course be dynamic, with content that is generated "on the fly" in response to current events or visitors' requests. In such cases, records of the supporting program and data will need to be kept as well. If a single page is set up to deliver both program-service and lobbying messages, then the website's record-keeping facilities will need to be fine-tuned to provide statistics on frequencies and allocations of the joint costs will need to be made.
If an outsider questions the appropriateness of a webpage which is no longer available from the organization's own website (say, for example, in connection with a report of inappropriate electioneering), it should be incumbant on the person making the complaint to document its appearance and content. It is practically impossible, of course, for the organization to prove that such a page never existed (or was not created by or for them); in the event of a disagreement about the provenance of a webpage, the authorities will frequently have no alternative but to rely on the credibility and bona fides of the parties involved.
Q: To what extent are statements made by subscribers to a forum, such as a listserv or newsgroup, attributable to an exempt organization that maintains the forum? Does attribution vary depending on the level of participation of the exempt organization in maintaining the forum (e.g., if the organization moderates discussion, acts as editor, etc.)?
Putnam Barber: The model should be that the sponsoring organization has no responsibility at all for the content of comments made by participants.
That principle is based on the assumption that the sponsor is operating the forum as a neutral public service.
There are actually two situations in which that principle might not be applicable.
One is the possibility implied by the second half of the IRS question. Suppose the sponsor moderates the comments in a way that influences the impression subsequent visitors receive (removing, for example, comments that do not match it's view of a desireable policy outcome). In that case, the sponsor is clearly responsible for what appears on its webpage and, if the sum of the messages amounts to political (or other) activity that violates the limits in 501(c)(3) or other laws, the sponsor must be responsible for that result.
The other possibility is in the way the forum is presented in the first place. "Use this list-serve to present your strongest arguments in favor of a flat-rate income tax!" Such a forum is tendentious from the start. The fact that the authors of individual statements are not officers, employees or agents of the sponsor makes no difference at all to me. The activity, and any related expenses, must be classified as either lobbying or electioneering and all related rules must be observed.
Q: Does providing a hyperlink on a charitable organization's website to another organization that engages in political campaign intervention result in per se prohibited political intervention? What facts and circumstances are relevant in determining whether the hyperlink constitutes a political campaign intervention by the charitable organization?
Putnam Barber: It matters a lot what context is provided. A list of official websites for all the campaigns in a race with general encouragement to become an informed voter is manifestly neutral. A link to one website with a message like "Find out why supporters of our cause will want to vote for this candidate" is obviously not!
It's particularly important that everyone recognize that what's found at the other end of a link can change from minute to minute. The organization that creates a webpage with a link to another site has a blurry responsibility to make sure it leads where they want to send people (to whi.....use.gov, for example, not whi.....use.com!). But it is unreasonable to expect website managers to monitor continuously the "other end" of their links....and, of course, there will always be more links beyond, mulitplying indefinitely.
It's the intentions and the instructions the makers of the starting point express online (and in related media, if applicable) that should guide the interpretation of their website.
Q: For charitable organizations that have not made the election under section 501(h), what facts and circumstances are relevant in determining whether lobbying communications made on the Internet are a substantial part of the organization's activities? For example, are location of the communication on the website (main page or subsidiary page) or number of hits relevant?
Putnam Barber: The appropriate measure is the amount of work that's been done to create and maintain the messages that raise the question.
Q: Does providing a hyperlink to the website of another organization that engages in lobbying activity constitute lobbying by a charitable organization? What facts and circumstances are relevant in determining whether the charitable organization has engaged in lobbying activity (for example, does it make a difference if lobbying activity is on the specific webpage to which the charitable organization provides the hyperlink rather than elsewhere on the other organization's website)?
Putnam Barber: The regulator's attention should be focused on the express intentions and documented activities of the owner of the website in question. The arrangement and content of websites at the "other end" of links can change without notice.
Q: What facts and circumstances are relevant in determining whether an Internet communication (either a limited access website or a listserv or email communication) is a communication directly to or primarily with members of the organization for a charitable organization that has made an election under section 501(h)?
Putnam Barber: Firstly, the extent to which the communication is limited to members. Secondly, if it seems likely that significant numbers of nonmembers received or accessed the communication, the efforts the organization made to prevent (or encourage) that.
Q: Are there any circumstances under which the payment of a percentage of sales from customers referred by the exempt organization to another website would be substantially related under section 513?
Rob Johnston: There are circumstances where the payment of a percentage of sales from customers referred would be substantially related. For example, the provision of links to a bookseller can be a valuable service for an organization offering management and leadership assistance. If the organization selects publications that serve its customers and in effect further the organization's mission, then the referral fee can be seen as a royalty earned on substantially related activity.
Putnam Barber: Yes. When the other webpage concentrates on sales of merchandise (etc.) that is substantially related to the sending organization's mission. Or when the sending organization restricts (or attempts to restrict) referrals to mechandise with is substantially related to its mission.
Q: Are solicitations for contributions made on the Internet (either on an organization's website or by email) in "written or printed form" for purposes of section 6113? If so, what facts and circumstances are relevant in determining whether a disclosure is in a "conspicuous and easily recognizable format"?
Putnam Barber: Email and webpages should definitely be considered "printed or written" in this context.
Conspicuous and easily recognized disclosures will be evident to casual visitors; they will appear within the borders of the first screen a typical visitor sees. If there is any doubt about their visiblity, the makers of the website will introduce additional steps to confirm that visitors have had a chance to view the disclosure.
For example, consider the case of donations to an organization not entitled to receive tax-deductible donations. If it wants to help visitors avoid claiming a disqualified deduction, it can program a confirmation page which appears after the visitor has provided information related to their donation and prior to the actual transaction. This page could say something like "Gifts to XYZ, Inc., are not deductible from federal income taxes. Do you want to continue? Clicking 'yes' will confirm your gift."
The automated receipt sent by such an organization should also include a disclosure that the gift is not deductible, in order to avoid the possibility of confusion at the time the donor is preparing a tax return.
Q: Does an organization meet the requirements of section 6115 for "quid pro quo" contributions with a webpage confirmation that may be printed out by the contributor or by sending a confirmation email to the donor?
Putnam Barber: I think donor's should be offered choices about this, and that whatever choice is made should be acceptable to the IRS. An individual that requests a paper receipt by US mail should, though, be entitled to get one and should not have to make extraordinary efforts to convey the request. The webpage option should only be used with an explicit notice that says no other receipt will be sent unless requested. Organizations should not expose inattentive donors to the risk of failing to obtain a contemporaneous receipt.
Q: Does a donor satisfy the requirement under section 170(f)(8) for a written acknowledgment of a contribution of $250 or more with a printed webpage confirmation or copy of a confirmation email from the donee organization?
Rob Johnston: Yes, business practices in other industries support that printed Web page confirmations and confirmation emails are accepted as receipts. See order confirmation practices in online merchants selling products and services. If a travel agent service can confirm a purchase of airline travel, hotel stays, and car rentals through these means, cannot a nonprofit confirm the receipt of a contribution in the same manner?
Putnam Barber: I think donors should be offered a choice, and those who want to receive a receipt through US mail should have an easy way to express that preference. If the organization expects the donor to print a retain a webpage receipt (and no other receipt will be sent), there needs to be a very conspicuous notice to that effect.
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