Behind the Deal: A Checklist for Charity Requests

One of the most popular projects is the charity CD: compilations, sold locally or nationally, with proceeds going to charities. Artists, labels, songwriters and publishers typically lend their names


Charitable projects abound during the holidays, when, to borrow from Dickens, "Want is keenly felt, and Abundance rejoices."

One of the most popular projects is the charity CD: compilations, sold locally or nationally, with proceeds going to charities.

Artists, labels, songwriters and publishers typically lend their names and forego certain compensation rights for such projects to benefit the charities. One tends to wonder, however: How many of them become unwitting marketing tools or profit centers for commercial interests?

Indie labels, artists and publishers rarely have an attorney review the "gratis" deals. As a result, they may end up in unscrupulous or inequitable deals.

The following is a list of questions to ask when approached to contribute work for a charity project:

  • Who is responsible for collecting the money paid by consumers?


  • Will all "gross" proceeds go to the charity, or only "net"?


  • If there are costs, will organizers provide a budget in advance that includes the names of those who will provide the services or goods, what they will provide and how much they will charge?


  • If there is a per-unit cost estimate, how many units must be sold to reach a break-even point to cover costs not directly attributable to the actual unit? For example, if costs for a CD compilation are estimated at $3.25 per unit, and it costs $1.50 only to manufacture, package and ship one unit, there is $1.75 that is set aside to pay for other services such as project production, marketing and promotion. At some point those costs will all be covered. When that occurs, will the additional $1.75 per unit go directly to the charity, or will someone else receive that amount as a "deferred fee" or incentive bonus?


  • Is the charity a "public charity" under I.R.S. Code section 501(c)(3)? Ask for a copy of the I.R.S. Letter of Determination or other proof of charity status to be assured of the organization's legitimacy.


  • Will the project producers provide a semi-annual or annual statement with proof of the number of units manufactured (such as an invoice for units manufactured), the number of units sold and the amount donated to the charity? If not, is there any other way they will verify that anyone who receives money for goods or services is not making more than the charity?


  • If you are satisfied with the answers, the project could be great. If you are not, there are other charitable projects to explore year-round.

    Additional information on this topic appears in Billboard's "Legal Matters," Dec. 11 issue.


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