irs rules & regs presented by: linda l’hote, associate vice chancellor campaign...

IRS Rules & RegsIRS Rules & Regs

Presented by:Presented by:

Linda L’Hote, Associate Vice ChancellorLinda L’Hote, Associate Vice ChancellorCampaign Administration, Advancement Services & Donor RelationsCampaign Administration, Advancement Services & Donor Relations

andand

Wayne Chipman, Executive Director for AdvancementWayne Chipman, Executive Director for Advancement Office of Gift Planning & EndowmentsOffice of Gift Planning & Endowments

Panel of ExpertsPanel of Experts

Kyle Newell-Groshong – Lead Accountant , Accounting ServicesKyle Newell-Groshong – Lead Accountant , Accounting Services

General ledger (PeopleSoft), Government Accounting Standards Board General ledger (PeopleSoft), Government Accounting Standards Board (GASB), University financial(GASB), University financial policies and procedures, reconciling information by policies and procedures, reconciling information by PeopleSoft/AdvancePeopleSoft/Advance

Donna Steinmetz – Sr. Fiscal Analyst, Gift & Pledge Processing ComplianceDonna Steinmetz – Sr. Fiscal Analyst, Gift & Pledge Processing Compliance

Gift ProcessingGift Processing

Tom Boren – Director, Advancement ServicesTom Boren – Director, Advancement Services

Technology & Information Support Group (TISG) and Biographical RecordsTechnology & Information Support Group (TISG) and Biographical Records

Penny Blank – Director, University Donor RelationsPenny Blank – Director, University Donor Relations

Accounting vs. CountingAccounting vs. Counting

AccountingAccounting follows all regulatory rules:follows all regulatory rules:

University policies/proceduresUniversity policies/procedures

Internal Revenue Service (IRS)Internal Revenue Service (IRS)

Government Accounting Standards Board (GASB)Government Accounting Standards Board (GASB)

Financial Accounting Standards Board (FASB)Financial Accounting Standards Board (FASB)

National Association of College & University Business Officers (NACUBO)National Association of College & University Business Officers (NACUBO)

CountingCounting follows CASE guidelines: follows CASE guidelines:

Counting generally measures productivityCounting generally measures productivity

Special rules may be developed by institutions regarding campaign Special rules may be developed by institutions regarding campaign counting, but these must also follow CASE guidelinescounting, but these must also follow CASE guidelines

Scope of Current AuditScope of Current Audit

Gifts-in-KindGifts-in-Kind

Expenditures for non-endowed fundsExpenditures for non-endowed funds– We have checks and balances for endowed We have checks and balances for endowed

fundsfunds

Topics of the DayTopics of the Day

What is a gift and what is not?What is a gift and what is not?

Definition of a Donor Definition of a Donor

What is a Gift-in-Kind?What is a Gift-in-Kind?

Types of Gift Credit (Legal and Soft)Types of Gift Credit (Legal and Soft)

When is a gift complete?When is a gift complete?

Gift AcceptanceGift Acceptance

DisclaimerDisclaimer

Wayne and I are NOT:Wayne and I are NOT:– Practicing attorneysPracticing attorneys– Tax advisorsTax advisors– Giving legal adviceGiving legal advice

Our qualifications are:Our qualifications are:– We have 37 years of combined experience working We have 37 years of combined experience working

with various compliance issues in Developmentwith various compliance issues in Development

What is a Gift?What is a Gift?

IRS defines a charitable contribution as a IRS defines a charitable contribution as a donation or gift to, or for the use of, a donation or gift to, or for the use of, a qualified organizationqualified organization. It is . It is voluntary voluntary and is made without getting, or expecting and is made without getting, or expecting to get anything of equal value.to get anything of equal value.

– IRS Publication 526IRS Publication 526

What is a Qualified What is a Qualified Organization?Organization?

Qualified organizations – include non-profit Qualified organizations – include non-profit groups that are organized and operated only for groups that are organized and operated only for one or more of the following purposesone or more of the following purposes– ReligiousReligious– CharitableCharitable– EducationalEducational– ScientificScientific– LiteraryLiterary– The prevention of cruelty to children or animalsThe prevention of cruelty to children or animals

– IRS Publication 526 lists examplesIRS Publication 526 lists examples

Voluntary, etc.Voluntary, etc.

Voluntary – not like an “exchange” transactionVoluntary – not like an “exchange” transaction– There must be “Donative Intent”There must be “Donative Intent”

– Given without the expectation of receiving Given without the expectation of receiving something of value in return that is outside something of value in return that is outside “quid pro quo” and/or “safe harbor” rules“quid pro quo” and/or “safe harbor” rules

– There is no value attached to naming There is no value attached to naming opportunities, names on honor rolls or gift opportunities, names on honor rolls or gift club membership; “safe harbor” rules applyclub membership; “safe harbor” rules apply

What is not a Gift?What is not a Gift?

Gifts of services are not generally eligible for the Gifts of services are not generally eligible for the federal income tax charitable deductionfederal income tax charitable deduction

Gifts of time, labor or effortGifts of time, labor or effort

Partial Interest (use of home, office space,Partial Interest (use of home, office space,

vehicle, condo, vacation home (not the same as vehicle, condo, vacation home (not the same as a “fractional interest” ex. Artwork)a “fractional interest” ex. Artwork)

DiscountsDiscounts

What is not a Gift?What is not a Gift?

Gifts to, or for the benefit of, a specific individual Gifts to, or for the benefit of, a specific individual (tuition payments)(tuition payments)

Contributions in which the donor benefitsContributions in which the donor benefits

Gifts to, or for the use of fraternities, sororities Gifts to, or for the use of fraternities, sororities and non-qualifying student organizationsand non-qualifying student organizations

Cost of raffle ticketsCost of raffle tickets

Definitions of a DonorDefinitions of a Donor

The IRS defines a donor as someone who makes a The IRS defines a donor as someone who makes a contribution directly to a “qualified organization” or legal contribution directly to a “qualified organization” or legal representative of that organization, or to a qualified trust representative of that organization, or to a qualified trust for that organization, or in a similar specifically for that organization, or in a similar specifically authorized legal arrangement.authorized legal arrangement.

CASE Management Reporting Standards defines donors CASE Management Reporting Standards defines donors as those individuals or organizations that transmit a gift as those individuals or organizations that transmit a gift or grant to a qualified institution. In cases where a or grant to a qualified institution. In cases where a contribution passes through several entities, the last of contribution passes through several entities, the last of the entities through which it passes before being the entities through which it passes before being received by the donee should be cited as the donor.received by the donee should be cited as the donor.

Two Tips for Determining the DonorTwo Tips for Determining the DonorAsk the Questions …Ask the Questions …

Whose asset was it immediately before it was Whose asset was it immediately before it was transferred to your organization?transferred to your organization?

Who is the check writer/signer?Who is the check writer/signer?– Be cautious though – some parties act as an Be cautious though – some parties act as an

agent for the donoragent for the donor

Non-Cash Gifts (Gifts-in-Kind)Non-Cash Gifts (Gifts-in-Kind)

What are they?What are they?– Gifts-in-Kind are gifts of tangible or intangible Gifts-in-Kind are gifts of tangible or intangible

personal property (other than cash or personal property (other than cash or securities) that are deductible by the donor securities) that are deductible by the donor under federal tax law.under federal tax law.

The IRS uses different terminologyThe IRS uses different terminology– They only refer to these as “Property other They only refer to these as “Property other

than cash” (non-cash gifts)than cash” (non-cash gifts)

Types of Non-Cash GiftsTypes of Non-Cash Gifts

Publicly Traded SecuritiesPublicly Traded Securities

Closely Held SecuritiesClosely Held Securities

Tangible Personal PropertyTangible Personal Property

Real PropertyReal Property

Intangible Personal PropertyIntangible Personal Property

Motor VehiclesMotor Vehicles

**

SecuritiesSecurities

Publicly Traded Securities (common stock)Publicly Traded Securities (common stock)

– Securities for which market quotations are readily Securities for which market quotations are readily available on an established securities market as of available on an established securities market as of the date of the contributionthe date of the contribution

Unlike many non-cash gifts, value is easy to Unlike many non-cash gifts, value is easy to determinedetermine

– Average of the high and low on the day you take Average of the high and low on the day you take possession of the assetpossession of the asset

SecuritiesSecurities

Closely Held SecuritiesClosely Held Securities

– Market quotations are not readily availableMarket quotations are not readily available

– Valuation is more difficult – many times an appraisal Valuation is more difficult – many times an appraisal is needed; may want to coordinate time of gift with is needed; may want to coordinate time of gift with annual business appraisalannual business appraisal

– Transaction is typically more complicated/lengthy to Transaction is typically more complicated/lengthy to administeradminister

– Marketability is a consideration in determining Marketability is a consideration in determining whether to acceptwhether to accept

Tangible Personal PropertyTangible Personal Property

The term The term tangible personal propertytangible personal property refers to any refers to any property, other than land or buildings, that can be seen property, other than land or buildings, that can be seen or touchedor touched

Examples include:Examples include:– EquipmentEquipment– SoftwareSoftware– Software LicensesSoftware Licenses– Printed MaterialsPrinted Materials– FoodFood– ArtworkArtwork– BooksBooks– FurnitureFurniture– Motor VehiclesMotor Vehicles

Motor VehiclesMotor Vehicles

Distinction now is based on intended use by Distinction now is based on intended use by DoneeDonee

Does the University intend to significantly use or Does the University intend to significantly use or materially improve the vehicle – ORmaterially improve the vehicle – OR

Does the University intend to sell the vehicle and Does the University intend to sell the vehicle and use the proceedsuse the proceeds

Motor Vehicles – cont’dMotor Vehicles – cont’d

Deductibility is affected for the donorDeductibility is affected for the donor

Additional responsibilities placed on donorAdditional responsibilities placed on donor

Specific rules regarding written Specific rules regarding written acknowledgments for motor vehiclesacknowledgments for motor vehicles

**

Deep Discounts or Deep Discounts or Bargain SalesBargain Sales

If a company offers to sell a product (not real If a company offers to sell a product (not real estate) to the University at a “deep discount” or estate) to the University at a “deep discount” or “bargain sale”, the company should provide a bill “bargain sale”, the company should provide a bill of sale clearly indicating the retail price, less the of sale clearly indicating the retail price, less the charitable contribution of the discounted amount charitable contribution of the discounted amount and a net cost. The discounted amount can be and a net cost. The discounted amount can be recorded as a gift-in-kind.recorded as a gift-in-kind.

– If the same discount applies to purchases made If the same discount applies to purchases made by the University on a regular basis and is not by the University on a regular basis and is not uniquely identified as a special reduction to be uniquely identified as a special reduction to be considered as a donation, no gift should be considered as a donation, no gift should be counted and there is no tax deduction.counted and there is no tax deduction.

ServicesServices

The value of a person’s or organization’s The value of a person’s or organization’s time or service is time or service is notnot considered a considered a charitable contribution and is charitable contribution and is notnot countable, regardless of whether the countable, regardless of whether the individual assists as a volunteer or as a individual assists as a volunteer or as a professional providing a specialized professional providing a specialized service.service.

ServicesServices

If services are not recognized by the IRS as a If services are not recognized by the IRS as a contribution, why are you asked to provide us contribution, why are you asked to provide us documentation?documentation?

– Because of non-IRS regulations that require Because of non-IRS regulations that require feeding certain service donations into the feeding certain service donations into the general ledger (PeopleSoft).general ledger (PeopleSoft).

Software, Hardware, and Software, Hardware, and Maintenance AgreementsMaintenance Agreements

Irrevocable gifts of software or hardware with an Irrevocable gifts of software or hardware with an established retail value are treated like other established retail value are treated like other gifts-in-kind and counted at the educational gifts-in-kind and counted at the educational discount value or the fair market value, as long discount value or the fair market value, as long as the agreement qualifies as a charitable as the agreement qualifies as a charitable donation under the laws of the appropriate tax donation under the laws of the appropriate tax authority.authority.


Maintenance agreements are considered Maintenance agreements are considered contributed services and are not to be counted contributed services and are not to be counted unless the agreement between the University unless the agreement between the University and the donor includes free upgrades that have and the donor includes free upgrades that have a higher established retail value. In that case, a higher established retail value. In that case, the difference between the original retail value the difference between the original retail value and the new retail value is countable as an and the new retail value is countable as an additional gift.additional gift.


To be considered a gift, the donor must To be considered a gift, the donor must irrevocably transfer ownership of the property to irrevocably transfer ownership of the property to the institution. There must be no implicit or the institution. There must be no implicit or explicit statement of exchange, purchase of explicit statement of exchange, purchase of services, or provision of exclusive information.services, or provision of exclusive information.


Large software donations can be highly Large software donations can be highly complex. Should you encounter one of these complex. Should you encounter one of these gifts, please contact me directly for assistance.gifts, please contact me directly for assistance.

Partial Interest in PropertyPartial Interest in Property

Donors cannot deduct a charitable contribution Donors cannot deduct a charitable contribution of less than their entire interest in the property. of less than their entire interest in the property. Therefore a partial interest would not be a gift, Therefore a partial interest would not be a gift, unless it falls within certain limited exceptions unless it falls within certain limited exceptions (for example, some charitable annuities).(for example, some charitable annuities).

A contribution of a right to use property is a A contribution of a right to use property is a contribution of less than the entire interest in that contribution of less than the entire interest in that property and is not a gift.property and is not a gift.

Partial Interest (cont’d)Partial Interest (cont’d)

Mary owns a 10-story office building and donates rent Mary owns a 10-story office building and donates rent free the use of the top floor to the University. Since Mary free the use of the top floor to the University. Since Mary still owns the building, she has contributed a partial still owns the building, she has contributed a partial interest in the property and cannot take a deduction for interest in the property and cannot take a deduction for the contribution.the contribution.

Mandy owns a vacation home at the beach that she Mandy owns a vacation home at the beach that she sometimes rents to others. For a fundraising auction she sometimes rents to others. For a fundraising auction she donated the right to use the vacation home for 1 week. donated the right to use the vacation home for 1 week. At the auction, the University received a bid from Lauren At the auction, the University received a bid from Lauren equal to the fair rental value of the home for 1 week. equal to the fair rental value of the home for 1 week. Mandy cannot claim a deduction because of the partial Mandy cannot claim a deduction because of the partial interest rule. Lauren cannot claim a deduction either, interest rule. Lauren cannot claim a deduction either, because she received a benefit equal to the amount of because she received a benefit equal to the amount of her payment.her payment.

Intangible Personal PropertyIntangible Personal Property

Defined:Defined:– Property that has a value but cannot be seen Property that has a value but cannot be seen

or touched (IRS Pub. 526)or touched (IRS Pub. 526)

Examples include:Examples include:– Patents and copyrightPatents and copyright– Intellectual propertyIntellectual property

Intellectual PropertyIntellectual Property

Considered intangible personal property, but a special Considered intangible personal property, but a special case:case:– Concern about the difficulty of determining the value Concern about the difficulty of determining the value

of the contributionof the contribution– Often the donor’s deduction was much greater than Often the donor’s deduction was much greater than

the benefit we realizedthe benefit we realized

A donor’s deduction is limited to the basis of the property A donor’s deduction is limited to the basis of the property or the fair market value of the property, whichever is or the fair market value of the property, whichever is less.less.

There are “caps” on intellectual property; lesser of actual There are “caps” on intellectual property; lesser of actual cost to produce or $1millioncost to produce or $1million



– Real property is land and generally anything Real property is land and generally anything that is built on, growing on or attached to the that is built on, growing on or attached to the land (IRS Pub. 526)land (IRS Pub. 526)

– Real property includes both improved and Real property includes both improved and unimproved real estateunimproved real estate

AuctionsAuctions

A donor contributing an item to be used in a A donor contributing an item to be used in a charity auction is eligible for a tax deduction charity auction is eligible for a tax deduction related to the item donated. Provide donor with related to the item donated. Provide donor with a Gift-in-Kind receipta Gift-in-Kind receipt

Items purchased at auction:Items purchased at auction:– Only the amount, if any, in excess of the fair Only the amount, if any, in excess of the fair

market value of an item purchased can be market value of an item purchased can be considered a charitable contribution.considered a charitable contribution.

GIK – Keep “use” in mindGIK – Keep “use” in mind

Contributed property must benefit the University Contributed property must benefit the University by either:by either:

– Related use – related to the purpose or function Related use – related to the purpose or function constituting the basis of the University’s exemption. constituting the basis of the University’s exemption.

Example – A painting donated to a University and used Example – A painting donated to a University and used for for educational purposes when students study iteducational purposes when students study it

– Unrelated use – unrelated to the purpose or function Unrelated use – unrelated to the purpose or function constituting the basis of the University’s exemption. constituting the basis of the University’s exemption.

Example – A case of wine given to the University to sell Example – A case of wine given to the University to sell at a at a fundraising auctionfundraising auction

Non-Cash GiftsNon-Cash GiftsForms 8283 and 8282Forms 8283 and 8282

Form 8283 – Non-cash Charitable Form 8283 – Non-cash Charitable ContributionsContributions– Donors use Form 8283 to report information Donors use Form 8283 to report information

about non-cash contributionsabout non-cash contributions

Form 8282 – Donee Information ReturnForm 8282 – Donee Information Return– Organizations use Form 8282 to report Organizations use Form 8282 to report

information to the IRS about dispositions of information to the IRS about dispositions of certain charitable deduction property which certain charitable deduction property which occurs within 3 years after contributionoccurs within 3 years after contribution

Form 8283Form 8283

Section A:Section A:– For deductions of $5,000 or lessFor deductions of $5,000 or less– Also for deductions of publicly traded Also for deductions of publicly traded

securities, regardless of amountsecurities, regardless of amount– Section A is completed entirely by the donorSection A is completed entirely by the donor

The University does The University does NOTNOT need to be involved need to be involved with Form 8283 for gifts listed in Section Awith Form 8283 for gifts listed in Section A

Gift Processing sends 8283’s as a courtesy for Gift Processing sends 8283’s as a courtesy for all Gifts-in-Kind, except for Athleticsall Gifts-in-Kind, except for Athletics

Form 8283Form 8283

Must Be CompletedMust Be Completed

– For deductions of more than $5,000, except For deductions of more than $5,000, except for deduction of publicly traded securitiesfor deduction of publicly traded securities

– Section B has four parts. Section B has four parts. Only Part IV, Donee Acknowledgement, is Only Part IV, Donee Acknowledgement, is completed by the University.completed by the University.

Form 8283Form 8283

What we What we DO NOTDO NOT certify: certify:

– The Appraisal (Value/Legitimacy)The Appraisal (Value/Legitimacy)

Form 8282Form 8282

Identifies the charitable organization, the original Identifies the charitable organization, the original donor and donee (any intermediate donees)donor and donee (any intermediate donees)

Provides information about the propertyProvides information about the property– Description, date received, date sold or Description, date received, date sold or

disposed of, amount received upon disposed of, amount received upon dispositiondisposition

The University must file if the property is sold The University must file if the property is sold before the required 3 years.before the required 3 years.

Donor Responsibilities – Donor Responsibilities – IRS FormsIRS Forms

Determine whether appropriate to file Form 8283Determine whether appropriate to file Form 8283

Complete donor sectionsComplete donor sections

Present form to University for signaturePresent form to University for signature

Obtain qualified appraisal if neededObtain qualified appraisal if needed

File the form with tax returnFile the form with tax return

University Responsibilities – University Responsibilities – IRS FormsIRS Forms

Verify informationVerify information

Complete and SignComplete and Sign

Return to DonorReturn to Donor

File Form 8282 if property is disposed of within 3 File Form 8282 if property is disposed of within 3 years after issuing receiptyears after issuing receipt

Receipting Non-Cash GiftsReceipting Non-Cash Gifts

Donor receipt should not state a value – Donor receipt should not state a value – only a description of the assetonly a description of the asset

– It is the responsibility of the donor to It is the responsibility of the donor to determine value for tax purposesdetermine value for tax purposes

Policies & Procedures forPolicies & Procedures forGifts-in-KindGifts-in-Kind

No one in the MU community may sign any IRS No one in the MU community may sign any IRS or other forms that are related to the acceptance or other forms that are related to the acceptance of gifts.of gifts.

Questions on IRS 8283 should first be directed Questions on IRS 8283 should first be directed to Donna Steinmetz.to Donna Steinmetz.

Gift Planning should be consulted early in the Gift Planning should be consulted early in the process of obtaining a vehicle.process of obtaining a vehicle.

Types of Gift CreditTypes of Gift Credit

Hard Credit is given to whoever made the Hard Credit is given to whoever made the contributioncontribution

Soft Credit (or recognition credit) is primarily for Soft Credit (or recognition credit) is primarily for recognition purposesrecognition purposes– Can give to as many as you wish as long as Can give to as many as you wish as long as

the total soft credit does not exceed the gift the total soft credit does not exceed the gift amount.amount.

When is a Gift Complete?When is a Gift Complete?

In general, a gift is complete when the donor has In general, a gift is complete when the donor has relinquished control of the asset to the Universityrelinquished control of the asset to the University

Checks:Checks:– Can give hard credit to one person or splitCan give hard credit to one person or split

Credit CardsCredit Cards– IRS Rules are firm about gift dateIRS Rules are firm about gift date– Important to educate donorImportant to educate donor

Important for you to understand the impact of gift Important for you to understand the impact of gift date for your donorsdate for your donors

Written Acknowledgments/Written Acknowledgments/Tax ReceiptsTax Receipts

Required for all contributions of $250 or more (except for quid pro Required for all contributions of $250 or more (except for quid pro quo)quo)

Donor is responsible for obtainingDonor is responsible for obtaining

Substantiation to donor must be contemporaneous (that is, in time Substantiation to donor must be contemporaneous (that is, in time for tax filing)for tax filing)

New vehicle rules require receipt within 30 days of gift (if retaining) New vehicle rules require receipt within 30 days of gift (if retaining) or 30 days from date of saleor 30 days from date of sale

Year-end receipts will not be given this year and in years to follow Year-end receipts will not be given this year and in years to follow as a cost-saving measureas a cost-saving measure

Donor may make a special request to receive a year-end summaryDonor may make a special request to receive a year-end summary

Written AcknowledgmentsWritten Acknowledgments

What must they include:What must they include:– The name of the organizationThe name of the organization

– The amount of a cash contribution or for non-The amount of a cash contribution or for non-cash gifts, a description of the property (NOT cash gifts, a description of the property (NOT a value)a value)

– A statement that no goods or services were A statement that no goods or services were provided by the organization, or a description provided by the organization, or a description and good faith estimate of the value of the and good faith estimate of the value of the goods and services (quid pro quo)goods and services (quid pro quo)

Written AcknowledgmentsWritten Acknowledgments

Special rules apply for donated vehicles sold at Special rules apply for donated vehicles sold at $500 or less$500 or less

Generally, if the charity sells the vehicle, the Generally, if the charity sells the vehicle, the donor deduction is limited to the gross proceeds donor deduction is limited to the gross proceeds received by the organization from the sale.received by the organization from the sale.

Written Disclosure & Written Disclosure & Quid Pro QuoQuid Pro Quo

A contribution made by a donor in exchange for goods or A contribution made by a donor in exchange for goods or services is known as a Quid pro quo contribution.services is known as a Quid pro quo contribution.

In these situations the disclosure must inform donor that In these situations the disclosure must inform donor that the tax-deductible amount is limited to the excess of the the tax-deductible amount is limited to the excess of the amount contributed over the value of goods or services amount contributed over the value of goods or services provided.provided.

Disclosure must also provide donor with a good-faith Disclosure must also provide donor with a good-faith estimate of the value of such goods or services.estimate of the value of such goods or services.

““Safe Harbor” RulesSafe Harbor” Rules

Quid Pro Quo receipts are Quid Pro Quo receipts are notnot required when: required when:

Fair market value of all benefits received in connection Fair market value of all benefits received in connection with the payment does not exceed the lesser of 2% of with the payment does not exceed the lesser of 2% of the gift amount or $89the gift amount or $89

ORORGift is $44.50 or more and the cost of all benefits given Gift is $44.50 or more and the cost of all benefits given does not exceed the IRS “low-cost articles” minimum of does not exceed the IRS “low-cost articles” minimum of $9.10$9.10

ANDANDThe only benefit the donor received consisted of token The only benefit the donor received consisted of token items bearing the University’s name or logo.items bearing the University’s name or logo.

““Safe Harbor” InformationSafe Harbor” Information

The “Safe Harbor” Rules change annually. The “Safe Harbor” Rules change annually. They are published in the last IRB of each They are published in the last IRB of each year (Internal Revenue Bulletin)year (Internal Revenue Bulletin)

ExampleExample

If a donor gives a charity $100 and receives a concert If a donor gives a charity $100 and receives a concert ticket valued at $40, the donor has made a quid pro quo ticket valued at $40, the donor has made a quid pro quo contributioncontribution

In this example the charitable contribution part of the In this example the charitable contribution part of the payment is $60payment is $60

Even though the deduction is less than $75, a disclosure Even though the deduction is less than $75, a disclosure statement must be sent because the donor’s payment statement must be sent because the donor’s payment (quid pro quo contribution) is more than $75(quid pro quo contribution) is more than $75

If a receipt is sent for payment under $75, it must show If a receipt is sent for payment under $75, it must show quid pro quo information. quid pro quo information. Also, remember, solicitation Also, remember, solicitation material must always mention quid pro quo.material must always mention quid pro quo.

Unreimbursed ExpensesUnreimbursed Expenses

Out-of-pocket expenses incurred while providing Out-of-pocket expenses incurred while providing volunteer services are deductible under certain volunteer services are deductible under certain circumstances (ex. Transportation)circumstances (ex. Transportation)

Donor cannot deduct a single contribution of Donor cannot deduct a single contribution of $250 or more without a written acknowledgment$250 or more without a written acknowledgment

Whose Rules Do You Follow?Whose Rules Do You Follow?

Internal Revenue Service (IRS)Internal Revenue Service (IRS)

Government Accounting Standards Board (GASB), Government Accounting Standards Board (GASB), Financial Accounting Standards Board (FASB) & Financial Accounting Standards Board (FASB) & National Association of College & University Business National Association of College & University Business Officers (NACUBO)Officers (NACUBO)

Council for Advancement and Support of Education Council for Advancement and Support of Education (CASE)(CASE)

University PolicyUniversity Policy

Donor’s WishesDonor’s Wishes

Whose Rules Do You Follow?Whose Rules Do You Follow?

Answer:Answer:

– All but the donor’s wishes, but their “wishes” All but the donor’s wishes, but their “wishes” should be addressedshould be addressed

Gift AcceptanceGift Acceptance

Why You Might Why You Might NotNot Want to AcceptWant to Accept

If the gift does not support the mission of your organizationIf the gift does not support the mission of your organization

If the gift requires the University to do something it otherwise would If the gift requires the University to do something it otherwise would not donot do

If the gift requires the University to do something in perpetuityIf the gift requires the University to do something in perpetuity

If the gift requires you to accept restrictions or obligations that are If the gift requires you to accept restrictions or obligations that are not in the best interest of your organizationnot in the best interest of your organization

If the gift comes with encumbrances such as debt, liability for toxic If the gift comes with encumbrances such as debt, liability for toxic clean-up, etc.clean-up, etc.

If the gift costs more to accept than it is worthIf the gift costs more to accept than it is worth

If the gift would be bad for community relationsIf the gift would be bad for community relations

Should We Accept This, and Should We Accept This, and What if We Don’t?What if We Don’t?

Whether or not you ultimately accept a gift or Whether or not you ultimately accept a gift or not, be aware of possible issuesnot, be aware of possible issues

Donor relations issuesDonor relations issues

Internal political issuesInternal political issues

Public relations issuesPublic relations issues

Ethical issuesEthical issues

Counting issuesCounting issues

Gift Acceptance – Gift Acceptance – Who Decides?Who Decides?

PresidentPresidentTreasurerTreasurerGeneral CounselGeneral CounselChancellorChancellorVice Chancellor for DevelopmentVice Chancellor for DevelopmentVice Chancellor for AdministrationVice Chancellor for AdministrationAssociate Vice Chancellor for Campaign Associate Vice Chancellor for Campaign Administration, Donor Relations & Advancement Administration, Donor Relations & Advancement ServicesServices

ReferencesReferences

Determining the Value of Donated Property – Determining the Value of Donated Property – IRS Pub. 561IRS Pub. 561http://www.irs.gov/pub/irs-pdf/p561.pdfhttp://www.irs.gov/pub/irs-pdf/p561.pdfCharitable Contributions – IRS Pub. 526Charitable Contributions – IRS Pub. 526http://www.irs.gov/pub/irs-pdf/p526.pdfhttp://www.irs.gov/pub/irs-pdf/p526.pdfCharitable Contribution – IRS Pub. 1771Charitable Contribution – IRS Pub. 1771http://www.irs.gov/pub/irs-pdf/p1771.pdfhttp://www.irs.gov/pub/irs-pdf/p1771.pdfUpdates on Disclosure and Substantiation RulesUpdates on Disclosure and Substantiation Ruleshttp://www.irs.ustreas.gov/pub/irs-tege/topic-g.pdfhttp://www.irs.ustreas.gov/pub/irs-tege/topic-g.pdf

Time for a Review…Time for a Review…

What if …What if …

Mr. Smith donates the use of an apartment to Mr. Smith donates the use of an apartment to the University to house a visiting professor for the University to house a visiting professor for the term (10 months). The rental cost of the the term (10 months). The rental cost of the apartment is $1,000 per month. apartment is $1,000 per month. Gift or No Gift?Gift or No Gift?

No Gift; soft credit No Gift; soft credit

How do you acknowledge?How do you acknowledge?

Thank-you letterThank-you letter


Mrs. Tisdale wants to write a check for $10,000 Mrs. Tisdale wants to write a check for $10,000 to support a student from out-of-state who has to support a student from out-of-state who has need. She wants to pick the student. need. She wants to pick the student. Gift or No Gift or No Gift?Gift?

No Gift; soft creditNo Gift; soft credit


Mr. Jones donates two tickets for a musical Mr. Jones donates two tickets for a musical concert to a gala auction valued at $100. The concert to a gala auction valued at $100. The winning bidder pays $150. winning bidder pays $150. Gift or No Gift?Gift or No Gift?

Gift; hard creditGift; hard credit


$100 donation for Jones; $50 donation to bidder$100 donation for Jones; $50 donation to bidder


Mr. Jones donates the use of his condo in Mr. Jones donates the use of his condo in Florida for one week to the gala auction valued Florida for one week to the gala auction valued at $2,000. The winning bid pays $1,500. at $2,000. The winning bid pays $1,500. Gift or Gift or No Gift?No Gift?



Thank-you letter to donor onlyThank-you letter to donor only


Golf Cars USA donates the use of Golf Cars for Golf Cars USA donates the use of Golf Cars for athletic events. The donor valued the service at athletic events. The donor valued the service at $2,500. $2,500. Gift or No Gift?Gift or No Gift?





Xerox allowed the school use of printers and Xerox allowed the school use of printers and copiers valued at $26,500? copiers valued at $26,500? Gift or No Gift?Gift or No Gift?





The Holiday Inn donated hotel rooms for Athletic The Holiday Inn donated hotel rooms for Athletic Department usage valued at $2,000.00. Department usage valued at $2,000.00. Gift or Gift or No Gift?No Gift?

Gift (to be determined due to special IRS Gift (to be determined due to special IRS regulations)regulations)


A company donated signs, banners and posters A company donated signs, banners and posters for University usage valued at $5,000. for University usage valued at $5,000. Gift or No Gift or No Gift?Gift?

Gift; hard creditGift; hard credit


Tax receiptTax receipt


A company provided one billboard for a year for A company provided one billboard for a year for University usage valued at $12,000. University usage valued at $12,000. Gift or no Gift or no gift?gift?

Gift; hard and soft creditGift; hard and soft credit


The University purchases a large piece of The University purchases a large piece of equipment for $68,500. The fair market value of equipment for $68,500. The fair market value of the equipment is $73,500. The University the equipment is $73,500. The University negotiated the one-time discount. negotiated the one-time discount. Gift or no gift?Gift or no gift?

Gift ($5,000); hard creditGift ($5,000); hard credit


That same company also donates a special part That same company also donates a special part that does not come standard with the equipment that does not come standard with the equipment valued at $5,000, several additional parts to valued at $5,000, several additional parts to make the equipment operational valued at make the equipment operational valued at $10,000 and they send someone from California $10,000 and they send someone from California to install the equipment valued at $5,000. to install the equipment valued at $5,000. Gift or Gift or no gift?no gift?

Gift - $15,000 hard credit. $5,000 for installation Gift - $15,000 hard credit. $5,000 for installation is is notnot a gift (services) a gift (services)

Who is the Donor?Who is the Donor?

Who would you record as the legal donor in the Who would you record as the legal donor in the following situation: Check received from John following situation: Check received from John Doe, MD, Inc. Does John Doe, the person or Doe, MD, Inc. Does John Doe, the person or John Doe, MD Inc., the business receive the John Doe, MD Inc., the business receive the hard credit?hard credit?

Hard credit to John Doe, MD, Inc., with soft Hard credit to John Doe, MD, Inc., with soft credit to John Doe personallycredit to John Doe personally

Who is the Donor?Who is the Donor?

Who would you record as the legal donor in the Who would you record as the legal donor in the following situation? Check received from following situation? Check received from Schwab Charitable Gift, indicating that we Schwab Charitable Gift, indicating that we should send an acknowledgment to Jane Smith. should send an acknowledgment to Jane Smith. Who gets the hard credit: Jane Smith or the Who gets the hard credit: Jane Smith or the Charitable Gift Fund?Charitable Gift Fund?It Depends! Donor Advised Fund vs. Donor It Depends! Donor Advised Fund vs. Donor Directed FundDirected FundDonor Advised Fund (charitable gift fund); no Donor Advised Fund (charitable gift fund); no hard credit. Donor Directed Fund; hard credithard credit. Donor Directed Fund; hard credit

Questions?Questions?

irs rules & regs presented by: linda l’hote, associate vice chancellor campaign...

Documents