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It is difficult to summarize the mountain of information on this topic into a simple email reply. Therefore, feel free to contact me off-line if you and your staff would like to discuss this further. The Reader's Digest answers include: - A quid pro quo exists any time a donor receives or expects to receive a benefit related to a gift - or cumulative giving. It does not matter if the benefit is conveyed immediately or months later. - The QPQ value must be determined by making a "good faith estimate" as to the "fair market value" of the benefits. Actual costs for an event may be considered but generally, do not reflect the full FMV. - It does not matter whether your costs are nominal or even $0. What matters is the value to the attendees. - There are two categories of benefits. The 2% or $111 (these numbers change every year) pertains to more substantial benefits and, yes, if the FMV is below whichever of these is LESS then no disclosure is required. The insubstantial or token benefit level is $11.10 and can be given only to donors who pay $55.50+. Below $55.50 the 2% rule applies. - NO BENEFITS CAN BE GIVEN TO DONORS WHO PAY THROUGH DAFs or FAMILY FOUNDATIONs. The exception is those benefits that meet the insubstantial benefit limit. 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 Thu, Apr 11, 2019 at 11:21 AM Katharine Yates <kyates@pts.edu> wrote: > I apologize for asking about something that’s probably been talked about > many times before, but I’m relatively new to this listserv and got a bit > overwhelmed trying to sift through all the archived conversations on this > topic! I’m interested in hearing what procedures others follow in regards > to quid pro quo in giving societies. My institution is looking to develop > some new giving societies, and we’d like to introduce some benefits for > each one. Right now we’re thinking that, at the very least, we would invite > members of these societies to a special event or two throughout the year, > and provide them with some kind of society-specific promotional item (like > maybe lapel pins). > > > > For special events like donor appreciation dinners – do we always have to > deduct the cost of the event from the donor’s donation, even if the gift > was made several months before the event and they did not make the donation > with the expectation of being invited to this event? What about if we want > to have a special reception or something with a guest lecturer (who is > already coming to campus for an event and being paid for it), and make it > available only to our society members? Would the FMV be $0, since the > speaker is already coming to campus anyway, or is it some fraction of > whatever the speaker is receiving for an honorarium, divided among all the > donors who attend? Does it make a difference if the speaker is *not* > being paid in the first place, or if that speaker doesn’t normally charge > for speaking? > > > > For promotional items and other materials – my understanding is that the > value of these items does not have to be deducted from a donor’s gift as > long as the item’s cost falls under the 2%/$109 limit. Is that correct? > > > > And one more question – what happens if deducting one of these things from > a donor’s gift means that the gift falls below the minimum level for the > giving society? How do we navigate that? > > > > Thank you all so much for your input! > > Katie > > > > Katie Campbell Yates > > Advancement Coordinator > > Pittsburgh Theological Seminary > > (P) 412-924-1376 > > (F) 412-924-1776 > > kyates@pts.edu > > > > [image: PTSLogoFnl-4C-PC] > > > > >

I apologize for asking about something that's probably been talked about many times before, but I'm relatively new to this listserv and got a bit overwhelmed trying to sift through all the archived conversations on this topic! I'm interested in hearing what procedures others follow in regards to quid pro quo in giving societies. My institution is looking to develop some new giving societies, and we'd like to introduce some benefits for each one. Right now we're thinking that, at the very least, we would invite members of these societies to a special event or two throughout the year, and provide them with some kind of society-specific promotional item (like maybe lapel pins). For special events like donor appreciation dinners - do we always have to deduct the cost of the event from the donor's donation, even if the gift was made several months before the event and they did not make the donation with the expectation of being invited to this event? What about if we want to have a special reception or something with a guest lecturer (who is already coming to campus for an event and being paid for it), and make it available only to our society members? Would the FMV be $0, since the speaker is already coming to campus anyway, or is it some fraction of whatever the speaker is receiving for an honorarium, divided among all the donors who attend? Does it make a difference if the speaker is not being paid in the first place, or if that speaker doesn't normally charge for speaking? For promotional items and other materials - my understanding is that the value of these items does not have to be deducted from a donor's gift as long as the item's cost falls under the 2%/$109 limit. Is that correct? And one more question - what happens if deducting one of these things from a donor's gift means that the gift falls below the minimum level for the giving society? How do we navigate that? Thank you all so much for your input! Katie Katie Campbell Yates Advancement Coordinator Pittsburgh Theological Seminary (P) 412-924-1376 (F) 412-924-1776 kyates@pts.edu<mailto:kyates@pts.edu> [PTSLogoFnl-4C-PC]

There is quite a bit to keep in mind! The underlying question with respect to deductibility is 1) what did the donor contribute, and 2) what did the donor receive/what did the donor expect to receive/what was the donor entitled to receive in return. Revenue Ruling 67-246 is one of the key documents on these issues. It doesn't matter whether the donor received the benefit in another calendar/tax/fiscal year after the year in which the contribution was made. It also doesn't matter if the specific event/benefit changes from year to year. Once you begin giving a benefit to donors at a given level, say, the IRS considers that you have created an expectation that the donor will receive a benefit, and it is your responsibility to make a good-faith effort disclose to the donor the benefit and its value. With respect to determining the fair market value of the benefit-say, the value of attending a dinner with a special guest speaker-the cost to the sponsoring charitable organization is always irrelevant. So it doesn't, for example, matter whether the speaker was already coming to campus. The IRS evaluates these matters from the perspective of the taxpayer: what did that taxpayer contribute, and what would that taxpayer have had to pay to receive the same (or comparable) benefit if the taxpayer just went out and bought it. Amenities and so forth matter, and the question would be what the taxpayer would have had to pay (at retail, since the taxpayer is receiving a meal for one person or a couple or at most a table, and not a room full of meals) to purchase a similar meal with similar amenities, entertainment, etc. If the taxpayer would not have had to pay extra for, say, a dinner including an address by the speaker than for a similar dinner without the speaker, if they went out and bought it, one could argue that the FMV isn't affected by the inclusion of the speaker. That's quite likely the case if the speaker is, say, the president of your organization, but less so if the speaker is someone who typically charges a speaking fee (which seems to be the case with your speaker). Promotional items are considered to be insubstantial and can be ignored if they meet one of two tests. One is that they are less than 2% of the value of the contribution and less than $111 (for 2019), as you say. The other is that they are logo items, cost the organization less than $11.10, and are given in consideration of a gift of at least $55.50 (again, 2019 limits). One thing to keep in mind is that this applies to benefits cumulatively, so if the donor gets dinner for two and a lapel pin valued at $10 and the total value is over 2% of the gift, the value of both dinner and pin have to be disclosed. Similarly, if some of the benefits are low-cost articles and some of the benefits aren't, the low-cost article exception doesn't apply. As always, the donor can always refuse/decline any and all benefits, preserving the deductibility of their gift. But they have to refuse the benefit when the gift is made (or immediately thereafter, once you disclose to the donor the benefits); they can't wait and later decide not to attend the dinner, because, in that case, they would have already accepted the benefit when they made the gift, affecting the deductibility. How you determine membership in your giving society is more a management issue than a tax deductibility issue. It's not uncommon the base gift society membership on the gross amount of the contribution(s) rather than tax deductible amount. The tax deductibility issue comes into play when the donor's contribution results in the donor's qualification for a benefit, however your organization determines that. (And it's worth mentioning that matching gift rules typically mean that you can't include the matching gifts when determining membership in a donor society if the donor then receives a substantial benefit in return for their membership. Similar considerations apply to qualifying a donor for a donor society based on a distribution from a donor-advised fund or a gift/grant from a private foundation.) My US$0.02 worth; the usual disclaimers apply. Good luck! Alan Alan S. Hejnal Data Quality Manager Smithsonian Institution - Office of Advancement 600 Maryland Avenue SW, Suite 600E P.O. Box 37012, MRC 527 Washington, DC 20013-7012 *: 202-633-8754 | *: HejnalA@si.edu<mailto:HejnalA@si.edu> [SNAGHTML5cbfa34]<https://www.si.edu/> [AASP_FundSvcs_LOGO-01(040pct)(mark)] From: Advancement Services Discussion List <FUNDSVCS@LISTSERV.FUNDSVCS.ORG> On Behalf Of Katharine Yates Sent: Thursday, April 11, 2019 11:22 AM To: FUNDSVCS@LISTSERV.FUNDSVCS.ORG Subject: [FUNDSVCS] Giving Societies & QPQ I apologize for asking about something that's probably been talked about many times before, but I'm relatively new to this listserv and got a bit overwhelmed trying to sift through all the archived conversations on this topic! I'm interested in hearing what procedures others follow in regards to quid pro quo in giving societies. My institution is looking to develop some new giving societies, and we'd like to introduce some benefits for each one. Right now we're thinking that, at the very least, we would invite members of these societies to a special event or two throughout the year, and provide them with some kind of society-specific promotional item (like maybe lapel pins). For special events like donor appreciation dinners - do we always have to deduct the cost of the event from the donor's donation, even if the gift was made several months before the event and they did not make the donation with the expectation of being invited to this event? What about if we want to have a special reception or something with a guest lecturer (who is already coming to campus for an event and being paid for it), and make it available only to our society members? Would the FMV be $0, since the speaker is already coming to campus anyway, or is it some fraction of whatever the speaker is receiving for an honorarium, divided among all the donors who attend? Does it make a difference if the speaker is not being paid in the first place, or if that speaker doesn't normally charge for speaking? For promotional items and other materials - my understanding is that the value of these items does not have to be deducted from a donor's gift as long as the item's cost falls under the 2%/$109 limit. Is that correct? And one more question - what happens if deducting one of these things from a donor's gift means that the gift falls below the minimum level for the giving society? How do we navigate that? Thank you all so much for your input! Katie Katie Campbell Yates Advancement Coordinator Pittsburgh Theological Seminary (P) 412-924-1376 (F) 412-924-1776 kyates@pts.edu<mailto:kyates@pts.edu> [PTSLogoFnl-4C-PC]

Thank you both so much for your responses! I really appreciate the detail - clearly we have a lot to consider. I will pass all this information along to my team and will get back to you if we have further questions. Katie From: Advancement Services Discussion List [mailto:FUNDSVCS@LISTSERV.FUNDSVCS.ORG] On Behalf Of Hejnal, Alan Sent: Thursday, April 11, 2019 11:58 AM To: FUNDSVCS@LISTSERV.FUNDSVCS.ORG Subject: Re: [FUNDSVCS] Giving Societies & QPQ There is quite a bit to keep in mind! The underlying question with respect to deductibility is 1) what did the donor contribute, and 2) what did the donor receive/what did the donor expect to receive/what was the donor entitled to receive in return. Revenue Ruling 67-246 is one of the key documents on these issues. It doesn't matter whether the donor received the benefit in another calendar/tax/fiscal year after the year in which the contribution was made. It also doesn't matter if the specific event/benefit changes from year to year. Once you begin giving a benefit to donors at a given level, say, the IRS considers that you have created an expectation that the donor will receive a benefit, and it is your responsibility to make a good-faith effort disclose to the donor the benefit and its value. With respect to determining the fair market value of the benefit-say, the value of attending a dinner with a special guest speaker-the cost to the sponsoring charitable organization is always irrelevant. So it doesn't, for example, matter whether the speaker was already coming to campus. The IRS evaluates these matters from the perspective of the taxpayer: what did that taxpayer contribute, and what would that taxpayer have had to pay to receive the same (or comparable) benefit if the taxpayer just went out and bought it. Amenities and so forth matter, and the question would be what the taxpayer would have had to pay (at retail, since the taxpayer is receiving a meal for one person or a couple or at most a table, and not a room full of meals) to purchase a similar meal with similar amenities, entertainment, etc. If the taxpayer would not have had to pay extra for, say, a dinner including an address by the speaker than for a similar dinner without the speaker, if they went out and bought it, one could argue that the FMV isn't affected by the inclusion of the speaker. That's quite likely the case if the speaker is, say, the president of your organization, but less so if the speaker is someone who typically charges a speaking fee (which seems to be the case with your speaker). Promotional items are considered to be insubstantial and can be ignored if they meet one of two tests. One is that they are less than 2% of the value of the contribution and less than $111 (for 2019), as you say. The other is that they are logo items, cost the organization less than $11.10, and are given in consideration of a gift of at least $55.50 (again, 2019 limits). One thing to keep in mind is that this applies to benefits cumulatively, so if the donor gets dinner for two and a lapel pin valued at $10 and the total value is over 2% of the gift, the value of both dinner and pin have to be disclosed. Similarly, if some of the benefits are low-cost articles and some of the benefits aren't, the low-cost article exception doesn't apply. As always, the donor can always refuse/decline any and all benefits, preserving the deductibility of their gift. But they have to refuse the benefit when the gift is made (or immediately thereafter, once you disclose to the donor the benefits); they can't wait and later decide not to attend the dinner, because, in that case, they would have already accepted the benefit when they made the gift, affecting the deductibility. How you determine membership in your giving society is more a management issue than a tax deductibility issue. It's not uncommon the base gift society membership on the gross amount of the contribution(s) rather than tax deductible amount. The tax deductibility issue comes into play when the donor's contribution results in the donor's qualification for a benefit, however your organization determines that. (And it's worth mentioning that matching gift rules typically mean that you can't include the matching gifts when determining membership in a donor society if the donor then receives a substantial benefit in return for their membership. Similar considerations apply to qualifying a donor for a donor society based on a distribution from a donor-advised fund or a gift/grant from a private foundation.) My US$0.02 worth; the usual disclaimers apply. Good luck! Alan Alan S. Hejnal Data Quality Manager Smithsonian Institution - Office of Advancement 600 Maryland Avenue SW, Suite 600E P.O. Box 37012, MRC 527 Washington, DC 20013-7012 *: 202-633-8754 | *: HejnalA@si.edu<mailto:HejnalA@si.edu> [SNAGHTML5cbfa34]<https://www.si.edu/> [AASP_FundSvcs_LOGO-01(040pct)(mark)] From: Advancement Services Discussion List <FUNDSVCS@LISTSERV.FUNDSVCS.ORG> On Behalf Of Katharine Yates Sent: Thursday, April 11, 2019 11:22 AM To: FUNDSVCS@LISTSERV.FUNDSVCS.ORG Subject: [FUNDSVCS] Giving Societies & QPQ I apologize for asking about something that's probably been talked about many times before, but I'm relatively new to this listserv and got a bit overwhelmed trying to sift through all the archived conversations on this topic! I'm interested in hearing what procedures others follow in regards to quid pro quo in giving societies. My institution is looking to develop some new giving societies, and we'd like to introduce some benefits for each one. Right now we're thinking that, at the very least, we would invite members of these societies to a special event or two throughout the year, and provide them with some kind of society-specific promotional item (like maybe lapel pins). For special events like donor appreciation dinners - do we always have to deduct the cost of the event from the donor's donation, even if the gift was made several months before the event and they did not make the donation with the expectation of being invited to this event? What about if we want to have a special reception or something with a guest lecturer (who is already coming to campus for an event and being paid for it), and make it available only to our society members? Would the FMV be $0, since the speaker is already coming to campus anyway, or is it some fraction of whatever the speaker is receiving for an honorarium, divided among all the donors who attend? Does it make a difference if the speaker is not being paid in the first place, or if that speaker doesn't normally charge for speaking? For promotional items and other materials - my understanding is that the value of these items does not have to be deducted from a donor's gift as long as the item's cost falls under the 2%/$109 limit. Is that correct? And one more question - what happens if deducting one of these things from a donor's gift means that the gift falls below the minimum level for the giving society? How do we navigate that? Thank you all so much for your input! Katie Katie Campbell Yates Advancement Coordinator Pittsburgh Theological Seminary (P) 412-924-1376 (F) 412-924-1776 kyates@pts.edu<mailto:kyates@pts.edu> [PTSLogoFnl-4C-PC]