One of the requirements for a charitable contribution (tax-deductible/countable under CASE standards) is that it support the qualified mission of the charitable organization to which the contribution is made. From that point of view, the issue with respect to student accounts is the same as with respect to faculty lunch accounts, in that the contribution could not be restricted to a needy individual student selected by the donor, as that would be seen as benefiting the individual recipient rather than benefiting the charitable mission of the organization. But if the gift were made to the organization for its general purposes, or to some restricted purpose that allows the organization to exercise its discretion in fulfillment of its charitable purpose (possibly a student fund from which the school administers, as with the faculty lunch money case), that would be fine.
There are a couple additional things to keep in mind with such efforts. One is whether the funds belong to the student. How could they not? Well, the program could be set up so that any unexpended balance is forfeited at the end of the term/year. (That may be more common with, for example, pre-paid meal plans). Or, it may be that the parents are the ones who put the money into the account, so that the money really belongs to the parents. (That has been more common with funds like dorm damage deposits.) A useful rule of thumb is that if the unexpended balance would refunded to a particular person, that’s the person to whom the funds belong. But that’s not an infallible rule; I’ve heard of programs where balances aren’t refundable (or not refundable under a certain threshold, because of the administrative overhead of making the refund) but could be directed as a charitable contribution.
If the money is determined to belong to the student or parent, there is no issue with the credit-to-last-entity rule, since the school is merely acting as the agent for the person (student or parent) to whom the money belongs. And you’re right that adequate documentation of the transaction—as well as clear explanation to the account holder—is important.
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 | •:
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HejnalA@si.edu>
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From: Advancement Services Discussion List <
FUNDSVCS@LISTSERV.FUNDSVCS.ORG> On Behalf Of Schaafsma, Beth
Sent: Thursday, April 18, 2019 1:37 PM
To:
FUNDSVCS@LISTSERV.FUNDSVCS.ORG
Subject: Re: [FUNDSVCS] Donation Question
Would the same apply for student accounts?
At our institution, students put funds into accounts that are tied to their school ID card, and that money can be used for anything from printing to meals and school supplies – anything that can be purchased on-campus. Frequently students have a small balance left at the end of their time here, and in many cases they don’t spend it down and the money gets left in their accounts. We would like to give them the opportunity to sign that balance away as a charitable donation to, say, a general student scholarship account. However, we want to be mindful of 1) appropriately documenting this transaction, and 2) that we are not donating to ourselves due to the “credit to last entity” rule.
Any advice would be welcome!
Beth Schaafsma
Assistant Director, Advancement Services
University Advancement
206-281-2063
SEATTLE PACIFIC UNIVERSITY | SPU.EDU
From: Advancement Services Discussion List <
FUNDSVCS@LISTSERV.FUNDSVCS.ORG<mailto:
FUNDSVCS@LISTSERV.FUNDSVCS.ORG>> On Behalf Of John Taylor
Sent: Wednesday, November 28, 2018 4:33 PM
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FUNDSVCS@LISTSERV.FUNDSVCS.ORG<mailto:
FUNDSVCS@LISTSERV.FUNDSVCS.ORG>
Subject: Re: [FUNDSVCS] Donation Question
What Brian said!
But the donations should go to a general student fund the school administers with the employees having no say as to the recipient.
John
John Taylor
919.816.5903
johntaylorconsulting@gmail.com<mailto:
johntaylorconsulting@gmail.com>
Big ideas; small keyboard
On Nov 28, 2018, at 6:46 PM, Brian Lacy <
brian@BRIANLACY.COM<mailto:
brian@BRIANLACY.COM>> wrote:
Yes Nicole,
If it is / was part of their compensation package and they voluntarily give it, it’s a donation. Its no different than them giving from their paycheck.
Sincerely,
Brian Lacy
brian@brianlacy.com<mailto:
brian@brianlacy.com>
860-478-9291
From: Advancement Services Discussion List <
FUNDSVCS@LISTSERV.FUNDSVCS.ORG<mailto:
FUNDSVCS@LISTSERV.FUNDSVCS.ORG>> On Behalf Of Nicole Beasley
Sent: Wednesday, November 28, 2018 5:41 PM
To:
FUNDSVCS@LISTSERV.FUNDSVCS.ORG<mailto:
FUNDSVCS@LISTSERV.FUNDSVCS.ORG>
Subject: [FUNDSVCS] Donation Question
At the beginning of our school year, our school placed $150 into each employees lunch account. Employees are asking to donate these funds to students in need. If they did so would their "donation" be tax deductible?
--
Nicole (Farrell) Beasley '98
Vice President for Advancement
Cathedral High School
P 317.968.7383
M 317.258.4614
F 317.542.1484
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