We are all pretty smart when it comes to this :-). See IRS Publication
526. A gift is only a gift if given irrevocably. There are further IRS
position papers regarding retention of control which also nullify a gift
(for tax purposes).
That said if you have promised to do something and failed to honor the
agreement - and there were no stipulations in the agreement as to alternate
use of funds - the donor has a right to sue you for breach of contract (and
there have been several notable related lawsuits). Therefore, in the
interest of donor relations and to avoid a suit it might be prudent to
return money to a donor. But since the gift was given irrevocably you
would now be creating an income event for the donor and would need to issue
a 1099-MISC.
John
John H. Taylor
Principal, John H. Taylor Consulting
2604 Sevier St.
Durham, NC 27705
johntaylorconsulting@gmail.com
919.816.5903 (cell/text)
Serving the Advancement Community Since 1987
On Mon, Mar 11, 2019 at 12:48 PM Deborah Brown <
browndl@cua.edu> wrote:
> Dear Listers:
> Might some wise person, such as John, confirm for me that in order for
> a gift to be charitable, the agreement cannot have a written provision that
> the donor has a right of return of the gift in the event the institution
> fails to do something promised?
> I do understand that in very rare circumstances an institution might
> find it necessary to return a gift but I don't think it's advisable nor
> wise to have right of return language in a standard gift agreement. I am
> suspecting it is not a true gift if that language is used.
>
> Many thanks
> Deborah Brown
> The Catholic University of America
>
> Sent from my iPhone