“This beer is amazing! You know, I run this fantastic non-profit that [fill in worthy cause here] and we are hosting a fundraising event in a few weeks. Would your brewery be able to donate a few growlers or a keg by chance?”

If you haven’t heard it yet, I assure you it is most certainly coming. Non-profits have discovered the lucrative effect libations have on fundraising and are

involving beer more and more everyday. Whether a bottle to be auctioned off to the highest of-legal- drinking-age bidder or a keg to be served at the event itself, non-profits are approaching breweries seemingly daily for donations. Luckily for the non-profits, this is allowed; but only to a certain extent. Unfortunately for the breweries, the laws that govern who, what, when, and where can be a bit tricky to navigate. Following is a primer on the basic laws governing brewery donation in the state of California. That being said, it is of course, always advisable to consult your attorney with legal questions as violations of these rules can entail steep consequences.

To begin, the WHO. Only a beer manufacturer may donate beer. More specifically, Type 01 and Type 23 license holders are allowed to donate, while Type 75 and Type 17 license holders are not. Per the Alcoholic Beverage Control Act, retail licensees are not allowed to donate beer under any circumstances. On the other end of the “who” spectrum, only a non-profit corporation or association exempt from the payment of income taxes under the provisions of the Internal Revenue Code may receive such donations. In other words, only non-profits designated as such federally qualify. These organizations are designated as a 501(c). This can get tricky as some states designate non-profits as well but, unless they are also federally designated, then they are not eligible to receive such donations. And remember, it is the brewery (not the non-profit) that will get hit with the penalty.

Secondly, the WHEN. Simply being a 501(c) does not mean that the nonprofit may host a socially lubricated event any time it pleases however. Generally speaking, the nonprofit is also responsible for having one of those pesky ABC licenses. Further, the type of license a non-profit is eligible depends on the type of non-profit. The license is requested for a particular day and generally lasts no longer. That license type also determines WHAT can be donated and WHERE the event can be held.

WHAT can be done with the beer is also regulated. While a beer manufacturer is free to either give the beer to non-profits for free or sell it to the non-profit at a discount; only a 501(c)(3) may auction beer and only if in possession of the corresponding license. All other licenses provide solely for the consumption of beer on the premises where it was sold. Off-sale, off-premises privileges are specifically unavailable. So it is worthwhile to double check with the non-profit to make sure that when your product is put in their hands it does not find itself in an ABC violation that could be traced back to you.

However, the non-profit is not required to get a license if: (1) no sale is made (including no admission charged for entry to the event) and (2) the premises at which the event is hosted are NOT open to the general public while serving alcohol and (3) the premises are NOT already licensed through the ABC. This means that the event cannot be at a bar, a restaurant, or your beautiful brewery. Nor can those premises be open to the general public but admission cannot be charged either. All three conditions must be met to waive the license requirement. This is most applicable for events hosted by the non-profit for its own staff at someone’s home perhaps or maybe a library or church that has been closed to the general public.

But also important is the WHY . Depending on the type of 501(c), only certain types of events can be licensed. A 501(c)(6) may only be licensed for meetings and conventions. A 501(c) is eligible for public services or fundraising. As mentioned earlier, only a 501(c)(3) may host an auction.

Lastly, let’s circle back to the WHAT. Above, we mentioned that a beer manufacturer may give or sell beer to an eligible non-profit. But that is true ONLY for BEER. Nowhere in the ABC have provisions been made for the donation of merchandise. In other words: no t-shirts, no glassware, no bottle openers, etc. And yes, that also applies to gift baskets. This is likely an oversight as the ABC Act is a rather sprawling document, ever changing, ever growing. This may or may not change at some point in the future, but for now the rules only allow for beer to exchange hands. Again, as penalties can be steep, it is likely better to be safe than sorry .

As a last word of caution, these rules are admittedly tricky and non-profits are not always well informed about how they work either. But now that you know the basics, go forth, earn good karma, and distribute that nectar of the gods for a worthy cause. 

Download full version here: B5.2.pdf