The library board may find that normal funding is not sufficient to fund all services and programs of the library. The board can examine other fundraising options. Before starting a major fundraising campaign, the library board should consult its attorney to avoid violation of any state or federal laws on soliciting charitable donations.
Many libraries, rather than being directly involved in fundraising events, work with a local Friends of the Library group or a library foundation. Such groups, usually with 501(c)(3) status, maintain their own treasury and use their proceeds to fund specific projects at the library. There are some basic differences in the purposes and operations of Friends and foundations. See Friends of the Library Groups and Library Foundations for more information.
Libraries can sell books, supplies, and/or promotional items to raise funds. KRS 139.498 states that occasional book sales would not need to collect sales tax. All ongoing sales of used books, DVDs, earphones, USB drives, book bags, etc. would be subject to sales tax. This would include sales from the circulation desk, continuous book sales, or library book stores.
Another issue to consider is the requirements of charitable gaming for fundraising. If the library, Friends group, or foundation has a raffle or uses gaming to raise funds, a Charitable Gaming License is required. Each organization would need its own gaming license.
See note on Tax Exempt Status.
Revised May 4th, 2021
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