We got some legal advice on this recently when planning fundraising for PR. We can handle sales like the way things like commemorative plaques are sold at fundraisers.
It’s a donation, but the tax write off is only what is in excess of the material cost.
For example let’s say a DMS mug = $5 of material, it is available for a $20 donation. The donation sheet we give them allows a $15 deduction.
This isn’t a legal opinion or advice. I’m not your lawyer. Don’t rely on it. You’ll go to hell if you do. Good. That’s out of the way.
The IRS says that an activity is an unrelated business (and subject to unrelated business income tax) if it is a trade or business that is regularly carried on and is not substantially related to furthering the exempt purpose of the organization. The IRS excludes from unrelated income a business in which substantially all the work is performed for the organization without compensation (e.g., bake sale). So maybe this applies. I don’t really know how this plays out in the statutes, cases, and IRS letter rulings, and I have no opinion about it.
But, the IRS doesn’t control Texas sales taxes. The Texas Comptroller says on its website:
The exemption from sales tax is for items an organization buys, not for the items it sells. Exempt organizations and other nonprofit organizations must get a sales tax permit (PDF) and collect and remit sales tax on all taxable items they sell, unless an exemption or exception applies.
The exempt or nonprofit organization does not need a sales tax permit if it: sells taxable items only during qualified tax-free fundraisers; sells only nontaxable items; or raises funds only by using a for-profit entity to sell taxable items.
The fundraising company can collect sales tax on the price of each taxable item, or it can be included in the price of each taxable item. If tax is included in the price of the item, the customer must be told that tax is included in the price.
IRC 501©(3) organizations can hold two one-day, tax-free sales or auctions each calendar year. An organization can hold the two tax-free sales back-to-back for a maximum of 48 consecutive hours during which they are not required to collect sales tax.
These organizations must apply with the Comptroller’s office and receive sales tax exempt status before holding a tax-free sales day.
And now you know. 
Thanks, probably going to hell anyway for completely unrelated reasons 
My summary was a gross over simplification of what they actually told us. Basically, we have a way to do it, and we have the guidelines on hand somewhere. As long as we follow them we are good to go.
It is far more complex if we want to support our members selling their own stuff through our booth. Then we have a ton of paperwork and taxes to collect. I don’t think we are anywhere near ready for that.
Thanks for the thought, but no. Just – no. If you are not an established vendor at the Canton First Monday sale, you get a pathetic spot. I tried it with one of my Ren friends. They were in the area, and thought they could make a few bucks. We should have just handed them the few products we sold, as we were in the red. As I recall, the fee wasn’t really all that bad – there was just so much competition, and we had such a lousy spot that we didn’t manage to cover it.
FYI – DMS already has a sales tax id. If we don’t have record of it, we should be able to get a copy from the Comptroller as we are still at the same address, and using the same name.
Speaking from a bookkeeping perspective, it should be easy-peasy. For us, the question should be – do we add sales tax to the sale, or do we have an implied sales tax? If we have volunteers who can operate a calculator, we should add tax to the sale. If our volunteers don’t think that they can calculate the sales tax, then the sale price already includes the sales tax, and a numbers-savvy person calculates how much of the total take is the sales tax at the end of the day.
In the first scenario, the price is $10, and the customer pays $10.83. In the second scenario, the price is $10, and DMS gets $9.23 and the Comptroller gets $.77. We would need to keep simple records, and turn in those records to the bookkeeper.
Well, I was about to say that those of us who are already selling stuff should be willing to staff these things so that we can make a buck, and at least some of us are already competent at these kind of nuances… but – not all artists are…
I’d hate to see us drop this idea just because “we” assume that “we” won’t be able to handle all the appropriate paperwork.
I don’t have worthy pieces yet but would be willing to staff booths if it’s on weekends or after the work day.
I’m up for helping staff too. I also have the contact information for the folks who run the booths for the Boho Market. I met them at The Sound last Friday.