Synopsis of Article

Having served as a director or officer with a couple of local estate planning councils and serving six years on the board of the National Association of Estate Planners & Councils (NAEPC), I have witnessed the positive impact sponsorship income has on the local council and its leaders. When a council’s financial position moves from one of survival to one of strength and possibility, the vision of the council’s leaders begins to expand and include implementing professional member attraction and retention strategies, coupled with enhanced delivery on the council’s mission. However, council leaders need to be aware that certain agreements or actions taken with sponsors may give rise to tax liability (i.e., unrelated business income tax (UBIT)) or corrective measures, particularly if their council is established as a tax-exempt entity.

Organizational Structures That Impact Estate Planning Council’s Activities

Local estate planning councils are typically organized as nonprofit entities (based on state law), exempt from federal tax (based on federal law).[1] There are limitations on nonprofit, tax-exempt entities from competing against for-profit entities to prevent tax-advantaged entities from capitalizing on their tax-exempt status at the expense of taxpaying, for-profit entities. When the IRS discovers a tax-advantaged entity has failed to stay within the limits of its tax exemption while raising income or support, the IRS may assess a tax on the non-qualifying income, impose penalties for the improper activity taken, or revoke the tax-exempt status of the entity.[2]

The Dues-Based Council Revenue Strategy

New and smaller councils report to NAEPC several challenges they face when establishing and growing their presence within the local professional community.[3] These include the location and time of meetings, the programs, and speakers to attract attendance at meetings, and the dues and fee structure. The common thread running through many of these choices is money. Councils, regardless of size, which operate from a solid financial position have more choices as to meeting location (e.g., high-end venues versus low-cost boardrooms), securing and paying speakers’ fees and travel costs for regionally known or nationally known speakers, and providing complimentary meals at council meetings to professional guests that may have an interest in joining the council.

Historically, local councils structured their annual dues as the only source of revenue. Increasing revenue would require a campaign to attract new members, which was no more than asking the current members to invite a colleague to the next council meeting in hopes they would join. Adding new members to increase revenue works until the council outgrows the current meeting space, requiring a search for a larger space that oftentimes requires a higher cost. This strategy does not provide the operational margin necessary to substantially alter the course of the council’s reach and impact. Therefore, several councils turned to sponsorship income to provide funding for highly visible, attractive activities that induce excitement within professional circles and the community at large.

Sponsorship Income: The KPI Driving Estate Planning Council Success

When starting a sponsorship campaign, the first solicitation is often to the employers of the current board members and officers. The board may form a sponsorship committee, chaired or co-chaired by a board member or officer, with select committee members skilled in sales or working in business development for their employers. After securing a few sponsors and identifying them during council meetings and professional events, future solicitations may produce more income. Firms and companies that did not participate in the initial sponsorship campaign may see their competitors being promoted among the council’s credentialed professionals and want to be included in this group of influential community leaders.

Most solicited companies or firms will ask “What will we receive in return for sponsoring the council?” The answer to this question will vary based on the design of the council’s sponsorship program. Some councils have one sponsorship level that highlights each participating firm on signage on a sponsor banner placed in highly visible locations at the meeting venue, such as at the entrance of the venue or behind the podium where the speaker will present. Other councils have created multiple tiers of sponsorship (e.g., silver, gold, platinum) that alter the frequency and prominence of the display of participating firms and companies. For example, higher tiered sponsors are displayed on banners in larger font, at the top of the banner with recognition as a platinum sponsor. Furthermore, these sponsors may be recognized on council social media accounts and webpages and have special events named after them (e.g., 2026 [Insert Name of Firm Sponsor Here] Estate Planning Gala).

Regardless of the sponsorship structure chosen (single level or multi-level) the charge for the sponsorship must be large enough to offset the additional costs associated with the marketing promised to the sponsoring firm,[4]  with money left over to support the growth of the council. A reasonable sponsorship fee will be determined in part by the location of the council, with councils located in larger cities able to set higher fees than those in smaller cities and towns.

Tax-Related Complications of Sponsorship Income

As previously mentioned, the IRS is aware that some actions taken by tax-exempt entities such as estate planning councils may unfairly compete against for-profit, taxpaying entities. To prevent this conflict between tax distinct entities, Congress has placed limits on tax-exempt entities. For example, there is a difference between qualified sponsorships, which are non-taxable undertakings, and taxable advertising. Regardless of contractual terms attempting to control the tax classification of activities between tax-exempt entities and their sponsors, the IRS will review the actions among the parties and determine if they are properly reported as non-taxable or taxable.

Qualified sponsorships arise when the firm or corporate sponsor doesn’t expect a significant return from their contribution to the estate planning council (e.g., a comparative endorsement elevating the sponsor’s services or products over their competitors).[5] Safe sponsorships for the estate planning council may include the use of the sponsor’s firm name or logo on signage, overhead projections used at meetings, or on council websites; however, the use of a sponsor’s logo that references any qualitative or comparative language will likely fail the qualified sponsorship exception.[6]

Nonprofit specialists at Caritas Law Group suggest the following acknowledgements that estate planning councils may safely use in their sponsorship programs:[7]

• Include the sponsor’s name, logo, phone number, website, and address,
• Utilize the phrase, “sponsored by (insert name of sponsor),”
• Identify the sponsor and their line of business in a neutral way, “ABC Bank. Full-service banking since 1950, and
• Extend specific thanks such as, “Thank you to our exclusive sponsor, DEF Enterprises.”

They also note a few actions that should be avoided in an estate planning council’s sponsorship program.[8]

• Agreeing to limit the sponsor’s competitors from participating in the sponsorship program,
• Describing the sponsor’s products or services as “the best” or “number one,”
• Adding calls to action (“Buy now”) to the sponsor’s services or products, and
• Adding links to the sponsor’s homepage that use sales pitches to drive site visitor action.

As the above examples of both conforming and non-conforming statements and actions illustrate, tax laws are very meticulous in defining the permissible uses of sponsorships. Estate planning councils should consult with experienced counsel to ensure their sponsorship programs are properly designed and carried out in compliance with state and federal laws.

Observe Current Councils Use of Sponsorships

For several examples of estate planning councils using sponsorships, follow the links below.

• Boston Estate Planning Council [9]
• Cincinnati Estate Planning Council [10]
• Dallas Estate Planning Council [11]
• Estate Planning Council of Birmingham, Inc. [12]
• Estate Planning Council of Naples [13]
• Estate Planning Council of Southeast Denver [14]
• Orange County Estate Planning Council [15]
• Southern Arizona Estate Planning Council [16]
• Spokane Estate Planning Council [17]

For Additional Information

Contact the NAEPC national office for additional information to help build a vibrant estate planning council.[18] Some of the resources available to council leaders include the following:

• Council Leader Education Series [19]
  • Roundtables
  • Virtual or In-Person Leadership Day
  • Website Tutorials
  • Executive / Administrator-Only Sessions
• Programming Resources [20]
  • No-Charge Speaker Program
  • Online Speaker Library
  • Robert G. Alexander Webinar Series
  • Input From Other Councils
• NAEPC Council Relations Committee [21]
• Resources and Sample Documents [22]

Author’s Biography

Harvey A. Hutchinson, J.D., CFP®, AEP®

Harvey Hutchinson serves as a lead financial planner with Brown Financial Advisory in Fairhope, Alabama. Previously, Harvey practiced law with an emphasis on estate planning. Harvey was a member of the Board of Directors for the National Association of Estate Planners & Councils (NAEPC) from 2020 to 2025, having served as the Chair of the Accredited Estate Planner (AEP®) Committee. Harvey has served as an instructor for Emory University’s continuing education program since 2007, a lecturer for the University of Virginia’s School of Continuing and Professional Studies since 2022, and an adjunct professor for Regent University School of Law’s M.A. in Financial Planning and Law program since 2025.

Harvey A. Hutchinson | (251) 928-9498 | harveyh@brownfinancialadvisory.com

[1] https://www.naepc.org/affiliated-councils/referrals

[2] https://www.americanbar.org/groups/business_law/resources/business-law-today/2021-november/unrelated-business-income-tax/

[3] The author has served as a facilitator at several Council Leadership programs during NAEPC’s annual conferences. Frequent topics of discussion during these programs included dues, sponsorships, programming ideas, and venue selection.

[4] For instance, free-standing, retractable fabric banners cost several hundred dollars to make at local print shops.

[5] UBIT: What Your Nonprofit Needs to Know about Sponsorships, Advertising, Royalties, and Cause Marketing, Venable LLP, April 5, 2016.

[6] Ibid.

[7] https://charitylawyerblog.com/2011/05/20/corporate-sponsorship-or-taxable-advertising/

[8] Ibid.

[9] https://www.bepc.org/page/BEPCSponsors

[10] https://www.cincinnatiestateplanningcouncil.com/council/sponsors

[11] https://www.dallasepc.org/

[12] https://www.birminghamepc.org/

[13] https://www.epcofnaples.org/

[14] https://www.epcsed.org/council/sponsors

[15] https://www.orangecountyepc.org/council/sponsors

[16] https://www.saepc.org/

[17] https://www.spokaneepc.org/council/sponsors

[18] https://www.naepc.org/

[19] https://www.naepc.org/affiliated-councils/council-leader-education

[20] https://www.naepc.org/affiliated-councils/speakers-bureau

[21] https://www.naepc.org/affiliated-councils/council-relations-committee

[22] https://www.naepc.org/affiliated-councils/referrals