FundSvcs Community

We are an art school and each year, a number of individuals and corporate donors give cash prizes to students participating in our annual student exhibition. Generally, the prize winners are selected by the faculty, and then the student receives a check directly after the donor gifts to our organization and we book as a charitable gift. In a few cases, the prize funds are considered “purchase prizes”. In one case, the prize donor selects the work to receive their prize and then receives the piece for their collection. In other cases, faculty select the winners of the purchase prizes, but the work still goes to the donor(s) for their personal collection(s). The value of the work equals the amount of the cash purchase prize given, so we are fairly certain none of these are charitable contributions, but rather, art sales. We have been counting them as charitable gifts until now. In one case, three siblings contribute toward a “purchase prize” and the work(s) selected by the faculty for the prize go to the collection of the family law firm. Two of the siblings work for the law firm. One does not. Are any of these gifts charitable, or is it still a quid pro quo issue? Would we document in our database and count toward our fundraising totals even if none of the contribution would be considered charitable? We believe we cannot do this, but want to double check to be certain. Thank you, Cecily Macy VP of Development Pennsylvania Academy of the Fine Arts

I see no gift at all when the donor(s) receive something of equal value in return. And I am not at all sure if the remained of the "prizes" are tax-deductible gifts, either. I'd grab a copy of IRS Publication 970 and sit down with your CFO and Counsel and have them advise as to whether the payments meet the IRS criteria for deductibility. 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 Tue, May 14, 2019 at 11:23 AM Cecily Macy <cecily.mandl@gmail.com> wrote: > We are an art school and each year, a number of individuals and corporate > donors give cash prizes to students participating in our annual student > exhibition. Generally, the prize winners are selected by the faculty, and > then the student receives a check directly after the donor gifts to our > organization and we book as a charitable gift. > > In a few cases, the prize funds are considered “purchase prizes”. In one > case, the prize donor selects the work to receive their prize and then > receives the piece for their collection. In other cases, faculty select the > winners of the purchase prizes, but the work still goes to the donor(s) for > their personal collection(s). The value of the work equals the amount of > the cash purchase prize given, so we are fairly certain none of these are > charitable contributions, but rather, art sales. We have been counting them > as charitable gifts until now. > > In one case, three siblings contribute toward a “purchase prize” and the > work(s) selected by the faculty for the prize go to the collection of the > family law firm. Two of the siblings work for the law firm. One does not. > Are any of these gifts charitable, or is it still a quid pro quo issue? > Would we document in our database and count toward our fundraising totals > even if none of the contribution would be considered charitable? We believe > we cannot do this, but want to double check to be certain. > > Thank you, > > Cecily Macy > VP of Development > Pennsylvania Academy of the Fine Arts >