A donor who is hosting an event on behalf of the institution in their home recently proposed the following:
They would like to give the institution one check which will cover the expenses of the event, and in turn, the institution will pay all of their vendors directly (catering, tent, valet, etc). This gift would come from their family foundation.
The donors mentioned that since they will be in attendance, they will use a personal check to cover the expenses directly tied to their attendance (assuming they mean cost per individual for catering).
For many reasons, this does not seem to comply with IRS regulations. Has anyone encountered a similar circumstance? How did you explain to the donor that this is not a possible option? Is there an option I am not thinking of? The donors shared that they have done this exact thing with other institutions, and that their tax advisor is comfortable with doing so.
Thank you,
Cecily
VP of Development
Pennsylvania Academy of the Fine Arts