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Good afternoon, Are there any CASE rules regarding donations from Governing Board members. Should they be asked for a desired donation or a required donation. And, what are the implications for both. For example, if desired, do they get a tax deduction or if required, is this a service contract. If you can point me to any resources, that would be helpful. Thank you, Angela Xulú Luna ’09, Director Advancement Services Whittier College Advancement 13406 Philadelphia Street // Whittier, CA 90608 axulu@whittier.edu T: 562.907.4221

At a high level: - Whether a gift is optional or mandatory for a board member doesn't change its status as a charitable gift. - Organizations all have different approaches to the issue of required contributions and minimum donation levels for board members. What your org will land on should be in alignment with your desire for the composition of your board. For example, if you're looking for board members with specific expertise in some field, it will be easier to get them if you don't also have a high mandatory giving level. Some boards say that members must include the org in among their top 3 giving priorities, without setting a specific minimum number. This approach allows for flexibility with board members of sharply varying capacity. - Board members do not operate under a service contract and are neither employees nor contractors of the org. They are directors, and their legal relationship is defined by the org's bylaws, which delineates what control they have over the org, and what duties, beyond the basic duties of loyalty and care, they have to the org. CASE has some rules about crediting donations from board members, but I don't think they speak to the issues you're raising. Thank you, Isaac Shalev CRM Expert Sage70, Inc. (917) 859-0151 isaac@sage70.com Schedule a *30-minute consultation *now: https://calendly.com/sage70/30min On Wed, Sep 4, 2019 at 4:15 PM Angela Xulu Luna <axulu@whittier.edu> wrote: > Good afternoon, > Are there any CASE rules regarding donations from Governing Board > members. Should they be asked for a desired donation or a required > donation. And, what are the implications for both. For example, if > desired, do they get a tax deduction or if required, is this a service > contract. If you can point me to any resources, that would be helpful. > > Thank you, > > Angela Xulú Luna ’09, Director > > Advancement Services > Whittier College Advancement > 13406 Philadelphia Street // Whittier, CA 90608 > axulu@whittier.edu > T: 562.907.4221 >

Is there some distinction between a higher ed Board of Governors vs a nonprofit Board of Directors that might create this distinction? In twenty years in the nonprofit field, I've never encountered the notion that mandatory board member gifts at NPOs, even at set amounts, are not tax deductible. Just the opposite, they're considered a best practice. Stanford Business had a survey showing over 40% of nonprofits had a give-or-get policy with a minimum number indicated (pdf link, page 4 bottom left - https://www.gsb.stanford.edu/sites/gsb/files/publication-pdf/cgri-survey-nonprofit-board-directors-2015.pdf). Many foundations and major donors won't support orgs that don't have 100% giving participation from board members. I would be astonished to learn that the IRS doesn't allow these gifts to be deducted. Folks should certainly consult their own advisers, but I did call my lawyer and he confirmed that in his opinion there's no issue with deducting those gifts. Thank you, Isaac Shalev CRM Expert Sage70, Inc. (917) 859-0151 isaac@sage70.com Schedule a *30-minute consultation *now: https://calendly.com/sage70/30min On Thu, Sep 5, 2019 at 1:57 PM Bob Swanson <rswanso@bgsu.edu> wrote: > I am in agreement with Michael’s comments regarding the tax deductibility > of a required donation in order to retain you Board position. It would be > difficult to deduct and then defend when audited. > > > > > > > > Bob Swanson, CPA > > Controller > > Bowling Green State University > > 1851 N. Research Drive > > Bowling Green, Ohio 43403 > > > > rswanso@bgsu.edu > > w 419.372.8597 > > > > > > > > *From:* Advancement Services Discussion List < > FUNDSVCS@LISTSERV.FUNDSVCS.ORG> *On Behalf Of *Michael Wyland > *Sent:* Thursday, September 5, 2019 1:52 PM > *To:* FUNDSVCS@LISTSERV.FUNDSVCS.ORG > *Subject:* [EXTERNAL] Re: [FUNDSVCS] Governing Board > > > > Isaac and Angela: > > > > The CASE rules may be the same regardless of whether a board gift is > voluntary or prescribed, but the IRS may take a different view and that > different view may affect gift receipting by the institution. > > > > I like the "top three giving priorities" approach that Isaac describes, or > the "meaningful gift" criterion that Jerrold Panas advocated. This > approach not only expands the pool of potential board members, but it also > makes the expectation of support sufficiently fluid as to avoid the > appearance (or fact) of a quid pro quo transaction. > > > > Setting a specific dollar amount or threshold contribution may nullify the > donor's ability to deduct the gift as a charitable contribution because it > becomes a transaction rather than a gift motivated primarily or exclusively > by philanthropic intent. > > > > > > [image: S&W_clr-small] > > Michael L. Wyland > > Sumption & Wyland > > 818 South Hawthorne Avenue > > Sioux Falls, South Dakota 57104-4537 > > (605) 336-0244 or (888) 4-SUMPTION > > > > Web site: http://www.sumptionandwyland.com > > LinkedIn Profile: http://www.linkedin.com/in/michaelwyland > > > > *"I never considered a difference of opinion in politics, in religion, in > philosophy, as cause for withdrawing from a friend." - Thomas Jefferson to > William Hamilton, April 22, 1800* >

Isaac and Angela: The CASE rules may be the same regardless of whether a board gift is voluntary or prescribed, but the IRS may take a different view and that different view may affect gift receipting by the institution. I like the "top three giving priorities" approach that Isaac describes, or the "meaningful gift" criterion that Jerrold Panas advocated. This approach not only expands the pool of potential board members, but it also makes the expectation of support sufficiently fluid as to avoid the appearance (or fact) of a quid pro quo transaction. Setting a specific dollar amount or threshold contribution may nullify the donor's ability to deduct the gift as a charitable contribution because it becomes a transaction rather than a gift motivated primarily or exclusively by philanthropic intent. [S&W_clr-small] Michael L. Wyland Sumption & Wyland 818 South Hawthorne Avenue Sioux Falls, South Dakota 57104-4537 (605) 336-0244 or (888) 4-SUMPTION Web site: http://www.sumptionandwyland.com LinkedIn Profile: http://www.linkedin.com/in/michaelwyland "I never considered a difference of opinion in politics, in religion, in philosophy, as cause for withdrawing from a friend." - Thomas Jefferson to William Hamilton, April 22, 1800

I am in agreement with Michael’s comments regarding the tax deductibility of a required donation in order to retain you Board position. It would be difficult to deduct and then defend when audited. Bob Swanson, CPA Controller Bowling Green State University 1851 N. Research Drive Bowling Green, Ohio 43403 rswanso@bgsu.edu<mailto:rswanso@bgsu.edu> w 419.372.8597 From: Advancement Services Discussion List <FUNDSVCS@LISTSERV.FUNDSVCS.ORG> On Behalf Of Michael Wyland Sent: Thursday, September 5, 2019 1:52 PM To: FUNDSVCS@LISTSERV.FUNDSVCS.ORG Subject: [EXTERNAL] Re: [FUNDSVCS] Governing Board Isaac and Angela: The CASE rules may be the same regardless of whether a board gift is voluntary or prescribed, but the IRS may take a different view and that different view may affect gift receipting by the institution. I like the "top three giving priorities" approach that Isaac describes, or the "meaningful gift" criterion that Jerrold Panas advocated. This approach not only expands the pool of potential board members, but it also makes the expectation of support sufficiently fluid as to avoid the appearance (or fact) of a quid pro quo transaction. Setting a specific dollar amount or threshold contribution may nullify the donor's ability to deduct the gift as a charitable contribution because it becomes a transaction rather than a gift motivated primarily or exclusively by philanthropic intent. [S&W_clr-small] Michael L. Wyland Sumption & Wyland 818 South Hawthorne Avenue Sioux Falls, South Dakota 57104-4537 (605) 336-0244 or (888) 4-SUMPTION Web site: http://www.sumptionandwyland.com LinkedIn Profile: http://www.linkedin.com/in/michaelwyland "I never considered a difference of opinion in politics, in religion, in philosophy, as cause for withdrawing from a friend." - Thomas Jefferson to William Hamilton, April 22, 1800

This all sounds good to me as well. I like that the “meaningful gift” and “top three” approaches both reflect the idea that governing board members should have a strong commitment to the organization, while also reflecting that board members may have different levels of affluence, and that some board members may primarily be selected for their ability to important make contributions that are not financial in nature. I would also add that I have seen boards where the expectation for financial support was not just “give” but rather “give-or-get”. The non-profit organization’s board had a couple members who also served on a number of for-profit boards, and who were able to leverage matching gifts that enhanced their financial support of the non-profit organization. Raising that dimension during their recruitment proved to be successful in encouraging them to facilitate those matches. 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 Michael Wyland Sent: Thursday, September 5, 2019 1:52 PM To: FUNDSVCS@LISTSERV.FUNDSVCS.ORG Subject: Re: [FUNDSVCS] Governing Board Isaac and Angela: The CASE rules may be the same regardless of whether a board gift is voluntary or prescribed, but the IRS may take a different view and that different view may affect gift receipting by the institution. I like the "top three giving priorities" approach that Isaac describes, or the "meaningful gift" criterion that Jerrold Panas advocated. This approach not only expands the pool of potential board members, but it also makes the expectation of support sufficiently fluid as to avoid the appearance (or fact) of a quid pro quo transaction. Setting a specific dollar amount or threshold contribution may nullify the donor's ability to deduct the gift as a charitable contribution because it becomes a transaction rather than a gift motivated primarily or exclusively by philanthropic intent. [S&W_clr-small] Michael L. Wyland Sumption & Wyland 818 South Hawthorne Avenue Sioux Falls, South Dakota 57104-4537 (605) 336-0244 or (888) 4-SUMPTION Web site: http://www.sumptionandwyland.com LinkedIn Profile: http://www.linkedin.com/in/michaelwyland "I never considered a difference of opinion in politics, in religion, in philosophy, as cause for withdrawing from a friend." - Thomas Jefferson to William Hamilton, April 22, 1800

Michael, I don't really understand the analysis by which you're concluding that a required contribution for a governing board could be considered non-charitable and as a result, non-deductible. A board seat is not a benefit. It's a set of duties. Board members are limiting themselves to act in the best interest of the organization, even when it goes against their own best interests. They take upon themselves duties of loyalty and care. Thus, a contribution, even a mandatory one, shouldn't be seen as a transaction that is for the benefit of the donor or in which the donor receives a benefit . That's the analysis all my advisers have shared with me - and I've now spoken to a two lawyers and an accountant, as this has really shaken my foundations! (One of them, btw, joking said to me that joining a board is most certainly not a benefit to the donor, as all board members know, or discover right after the first meeting!) The real issue, practically, is that if a charity knowingly accepts money that is NOT a donation, but issues a charitable receipt, that's a problem. Thus, while any individual's tax situation is not for an NPO to comment on, nor is the deductibility of any gift by any donor, it does appear that a charity has to determine whether money it receives is a charitable gift. That's why this issue matters - not to the donor, who, as you rightly say, isn't going to face any enforcement, but to the NPO, that has to set policies regarding board eligibility and duties, and has to properly acknowledge gifts vs non-gifts. The best advice, in all such cases, is to consult your tax adviser for your tax return, so none of these conversations should be seen as direct guidance to anyone, of course. I would very much welcome a substantive clarification from an IRS ruling, case law, or anything else that clearly explicates this issue. Anyone have something we could look at? Thank you, Isaac Shalev CRM Expert Sage70, Inc. (917) 859-0151 isaac@sage70.com Schedule a *30-minute consultation *now: https://calendly.com/sage70/30min On Fri, Sep 6, 2019 at 3:59 PM Michael Wyland <michael@sumptionandwyland.com> wrote: > Isaac: > > > > I'm not surprised that many consider a mandatory contribution as a > condition of board service to be "best practice." That's not the same as > it being tax deductible as a charitable gift. > > > > If the goal is 100% board giving, with the amount being flexible based on > each member's capacity, there's no problem. As much as I hate the "give or > get" approach, that, too, can be acceptable as a deductible charitable gift > as long as specific dollar amounts are avoided. > > > > As I understand it, the IRS doesn't routinely investigate the conditions > under which a charitable deduction is made by a taxpayer. Even in audit > conditions, usually the presence of appropriate and contemporaneous > documentation (see IRS Publication 1771) by an eligible charity is > sufficient. As a result, the issue is raised very rarely, and usually as a > feature of a larger investigation either into a taxpayer or a charity. > > > > The lack of stories about violations of the IRS regulations in this area > help perpetuate the belief that mandatory board member gifts are somehow OK > and are the same as voluntary giving. Due to the relative lack of IRS > investigation capacity and the most common failing of Form 990 filings > being missing or incomplete information, it's unlikely that we'll hear > about enforcement actions in this area any time soon. > > > > Nothing in my musings should be interpreted as condoning, much less an > invitation, to engage in conduct contrary to IRS regulations! That is > emphatically not my intent, as I hope is clear in the context of my > response. > > > > Michael > > > > [image: S&W_clr-small] > > Michael L. Wyland > > Sumption & Wyland > > 818 South Hawthorne Avenue > > Sioux Falls, South Dakota 57104-4537 > > (605) 336-0244 or (888) 4-SUMPTION > > > > Web site: http://www.sumptionandwyland.com > > LinkedIn Profile: http://www.linkedin.com/in/michaelwyland > > > > *"I never considered a difference of opinion in politics, in religion, in > philosophy, as cause for withdrawing from a friend." - Thomas Jefferson to > William Hamilton, April 22, 1800* > > > > *From:* Advancement Services Discussion List *On Behalf Of *Isaac Shalev > *Sent:* Thursday, September 5, 2019 2:47 PM > *To:* FUNDSVCS@LISTSERV.FUNDSVCS.ORG > *Subject:* Re: [FUNDSVCS] Governing Board > > > > Is there some distinction between a higher ed Board of Governors vs a > nonprofit Board of Directors that might create this distinction? > > > > In twenty years in the nonprofit field, I've never encountered the notion > that mandatory board member gifts at NPOs, even at set amounts, are not tax > deductible. Just the opposite, they're considered a best practice. Stanford > Business had a survey showing over 40% of nonprofits had a give-or-get > policy with a minimum number indicated (pdf link, page 4 bottom left - > https://www.gsb.stanford.edu/sites/gsb/files/publication-pdf/cgri-survey-nonprofit-board-directors-2015.pdf). > Many foundations and major donors won't support orgs that don't have 100% > giving participation from board members. I would be astonished to learn > that the IRS doesn't allow these gifts to be deducted. Folks should > certainly consult their own advisers, but I did call my lawyer and he > confirmed that in his opinion there's no issue with deducting those gifts. > > > > Thank you, > Isaac Shalev > CRM Expert > Sage70, Inc. > (917) 859-0151 > isaac@sage70.com > > > > Schedule a *30-minute consultation *now: > > https://calendly.com/sage70/30min > > > > > > On Thu, Sep 5, 2019 at 1:57 PM Bob Swanson <rswanso@bgsu.edu> wrote: > > I am in agreement with Michael’s comments regarding the tax deductibility > of a required donation in order to retain you Board position. It would be > difficult to deduct and then defend when audited. > > > > > > > > Bob Swanson, CPA > > Controller > > Bowling Green State University > > 1851 N. Research Drive > > Bowling Green, Ohio 43403 > > > > rswanso@bgsu.edu > > w 419.372.8597 > > > > > > > > *From:* Advancement Services Discussion List < > FUNDSVCS@LISTSERV.FUNDSVCS.ORG> *On Behalf Of *Michael Wyland > *Sent:* Thursday, September 5, 2019 1:52 PM > *To:* FUNDSVCS@LISTSERV.FUNDSVCS.ORG > *Subject:* [EXTERNAL] Re: [FUNDSVCS] Governing Board > > > > Isaac and Angela: > > > > The CASE rules may be the same regardless of whether a board gift is > voluntary or prescribed, but the IRS may take a different view and that > different view may affect gift receipting by the institution. > > > > I like the "top three giving priorities" approach that Isaac describes, or > the "meaningful gift" criterion that Jerrold Panas advocated. This > approach not only expands the pool of potential board members, but it also > makes the expectation of support sufficiently fluid as to avoid the > appearance (or fact) of a quid pro quo transaction. > > > > Setting a specific dollar amount or threshold contribution may nullify the > donor's ability to deduct the gift as a charitable contribution because it > becomes a transaction rather than a gift motivated primarily or exclusively > by philanthropic intent. > > > > > > [image: S&W_clr-small] > > Michael L. Wyland > > Sumption & Wyland > > 818 South Hawthorne Avenue > > Sioux Falls, South Dakota 57104-4537 > > (605) 336-0244 or (888) 4-SUMPTION > > > > Web site: http://www.sumptionandwyland.com > > LinkedIn Profile: http://www.linkedin.com/in/michaelwyland > > > > *"I never considered a difference of opinion in politics, in religion, in > philosophy, as cause for withdrawing from a friend." - Thomas Jefferson to > William Hamilton, April 22, 1800* > >

I am late to this discussion. But if I am following correctly, the issue if a mandatory payment is the issue. The IRS makesnt clear that for a deductible donation to exist it must be voluntary. See IRS Publication 526. The argument here is that you are being forced to pay in order to play. Depending on the circumstances, this would nullify the deductibility. John John Taylor 919.816.5903 johntaylorconsulting@gmail.com Big ideas; small keyboard > On Sep 6, 2019, at 5:58 PM, Isaac Shalev <isaac@sage70.com> wrote: > > Michael, I don't really understand the analysis by which you're concluding that a required contribution for a governing board could be considered non-charitable and as a result, non-deductible. A board seat is not a benefit. It's a set of duties. Board members are limiting themselves to act in the best interest of the organization, even when it goes against their own best interests. They take upon themselves duties of loyalty and care. Thus, a contribution, even a mandatory one, shouldn't be seen as a transaction that is for the benefit of the donor or in which the donor receives a benefit . That's the analysis all my advisers have shared with me - and I've now spoken to a two lawyers and an accountant, as this has really shaken my foundations! (One of them, btw, joking said to me that joining a board is most certainly not a benefit to the donor, as all board members know, or discover right after the first meeting!) > > The real issue, practically, is that if a charity knowingly accepts money that is NOT a donation, but issues a charitable receipt, that's a problem. Thus, while any individual's tax situation is not for an NPO to comment on, nor is the deductibility of any gift by any donor, it does appear that a charity has to determine whether money it receives is a charitable gift. That's why this issue matters - not to the donor, who, as you rightly say, isn't going to face any enforcement, but to the NPO, that has to set policies regarding board eligibility and duties, and has to properly acknowledge gifts vs non-gifts. > > The best advice, in all such cases, is to consult your tax adviser for your tax return, so none of these conversations should be seen as direct guidance to anyone, of course. I would very much welcome a substantive clarification from an IRS ruling, case law, or anything else that clearly explicates this issue. Anyone have something we could look at? > > > Thank you, > Isaac Shalev > CRM Expert > Sage70, Inc. > (917) 859-0151 > isaac@sage70.com > > Schedule a 30-minute consultation now: > https://calendly.com/sage70/30min > > >> On Fri, Sep 6, 2019 at 3:59 PM Michael Wyland <michael@sumptionandwyland.com> wrote: >> Isaac: >> >> >> >> I'm not surprised that many consider a mandatory contribution as a condition of board service to be "best practice." That's not the same as it being tax deductible as a charitable gift. >> >> >> >> If the goal is 100% board giving, with the amount being flexible based on each member's capacity, there's no problem. As much as I hate the "give or get" approach, that, too, can be acceptable as a deductible charitable gift as long as specific dollar amounts are avoided. >> >> >> >> As I understand it, the IRS doesn't routinely investigate the conditions under which a charitable deduction is made by a taxpayer. Even in audit conditions, usually the presence of appropriate and contemporaneous documentation (see IRS Publication 1771) by an eligible charity is sufficient. As a result, the issue is raised very rarely, and usually as a feature of a larger investigation either into a taxpayer or a charity. >> >> >> >> The lack of stories about violations of the IRS regulations in this area help perpetuate the belief that mandatory board member gifts are somehow OK and are the same as voluntary giving. Due to the relative lack of IRS investigation capacity and the most common failing of Form 990 filings being missing or incomplete information, it's unlikely that we'll hear about enforcement actions in this area any time soon. >> >> >> >> Nothing in my musings should be interpreted as condoning, much less an invitation, to engage in conduct contrary to IRS regulations! That is emphatically not my intent, as I hope is clear in the context of my response. >> >> >> >> Michael >> >> >> >> <image003.jpg> >> >> Michael L. Wyland >> >> Sumption & Wyland >> >> 818 South Hawthorne Avenue >> >> Sioux Falls, South Dakota 57104-4537 >> >> (605) 336-0244 or (888) 4-SUMPTION >> >> >> >> Web site: http://www.sumptionandwyland.com >> >> LinkedIn Profile: http://www.linkedin.com/in/michaelwyland >> >> >> >> "I never considered a difference of opinion in politics, in religion, in philosophy, as cause for withdrawing from a friend." - Thomas Jefferson to William Hamilton, April 22, 1800 >> >> >> >> From: Advancement Services Discussion List On Behalf Of Isaac Shalev >> Sent: Thursday, September 5, 2019 2:47 PM >> To: FUNDSVCS@LISTSERV.FUNDSVCS.ORG >> Subject: Re: [FUNDSVCS] Governing Board >> >> >> >> Is there some distinction between a higher ed Board of Governors vs a nonprofit Board of Directors that might create this distinction? >> >> >> >> In twenty years in the nonprofit field, I've never encountered the notion that mandatory board member gifts at NPOs, even at set amounts, are not tax deductible. Just the opposite, they're considered a best practice. Stanford Business had a survey showing over 40% of nonprofits had a give-or-get policy with a minimum number indicated (pdf link, page 4 bottom left - https://www.gsb.stanford.edu/sites/gsb/files/publication-pdf/cgri-survey-nonprofit-board-directors-2015.pdf). Many foundations and major donors won't support orgs that don't have 100% giving participation from board members. I would be astonished to learn that the IRS doesn't allow these gifts to be deducted. Folks should certainly consult their own advisers, but I did call my lawyer and he confirmed that in his opinion there's no issue with deducting those gifts. >> >> >> >> Thank you, >> Isaac Shalev >> CRM Expert >> Sage70, Inc. >> (917) 859-0151 >> isaac@sage70.com >> >> >> >> Schedule a 30-minute consultation now: >> >> https://calendly.com/sage70/30min >> >> >> >> >> >> On Thu, Sep 5, 2019 at 1:57 PM Bob Swanson <rswanso@bgsu.edu> wrote: >> >> I am in agreement with Michael’s comments regarding the tax deductibility of a required donation in order to retain you Board position. It would be difficult to deduct and then defend when audited. >> >> >> >> >> >> >> >> Bob Swanson, CPA >> >> Controller >> >> Bowling Green State University >> >> 1851 N. Research Drive >> >> Bowling Green, Ohio 43403 >> >> >> >> rswanso@bgsu.edu >> >> w 419.372.8597 >> >> >> >> >> >> >> >> From: Advancement Services Discussion List <FUNDSVCS@LISTSERV.FUNDSVCS.ORG> On Behalf Of Michael Wyland >> Sent: Thursday, September 5, 2019 1:52 PM >> To: FUNDSVCS@LISTSERV.FUNDSVCS.ORG >> Subject: [EXTERNAL] Re: [FUNDSVCS] Governing Board >> >> >> >> Isaac and Angela: >> >> >> >> The CASE rules may be the same regardless of whether a board gift is voluntary or prescribed, but the IRS may take a different view and that different view may affect gift receipting by the institution. >> >> >> >> I like the "top three giving priorities" approach that Isaac describes, or the "meaningful gift" criterion that Jerrold Panas advocated. This approach not only expands the pool of potential board members, but it also makes the expectation of support sufficiently fluid as to avoid the appearance (or fact) of a quid pro quo transaction. >> >> >> >> Setting a specific dollar amount or threshold contribution may nullify the donor's ability to deduct the gift as a charitable contribution because it becomes a transaction rather than a gift motivated primarily or exclusively by philanthropic intent. >> >> >> >> >> >> <image004.jpg> >> >> Michael L. Wyland >> >> Sumption & Wyland >> >> 818 South Hawthorne Avenue >> >> Sioux Falls, South Dakota 57104-4537 >> >> (605) 336-0244 or (888) 4-SUMPTION >> >> >> >> Web site: http://www.sumptionandwyland.com >> >> LinkedIn Profile: http://www.linkedin.com/in/michaelwyland >> >> >> >> "I never considered a difference of opinion in politics, in religion, in philosophy, as cause for withdrawing from a friend." - Thomas Jefferson to William Hamilton, April 22, 1800

Isaac: I'm not surprised that many consider a mandatory contribution as a condition of board service to be "best practice." That's not the same as it being tax deductible as a charitable gift. If the goal is 100% board giving, with the amount being flexible based on each member's capacity, there's no problem. As much as I hate the "give or get" approach, that, too, can be acceptable as a deductible charitable gift as long as specific dollar amounts are avoided. As I understand it, the IRS doesn't routinely investigate the conditions under which a charitable deduction is made by a taxpayer. Even in audit conditions, usually the presence of appropriate and contemporaneous documentation (see IRS Publication 1771) by an eligible charity is sufficient. As a result, the issue is raised very rarely, and usually as a feature of a larger investigation either into a taxpayer or a charity. The lack of stories about violations of the IRS regulations in this area help perpetuate the belief that mandatory board member gifts are somehow OK and are the same as voluntary giving. Due to the relative lack of IRS investigation capacity and the most common failing of Form 990 filings being missing or incomplete information, it's unlikely that we'll hear about enforcement actions in this area any time soon. Nothing in my musings should be interpreted as condoning, much less an invitation, to engage in conduct contrary to IRS regulations! That is emphatically not my intent, as I hope is clear in the context of my response. Michael [S&W_clr-small] Michael L. Wyland Sumption & Wyland 818 South Hawthorne Avenue Sioux Falls, South Dakota 57104-4537 (605) 336-0244 or (888) 4-SUMPTION Web site: http://www.sumptionandwyland.com LinkedIn Profile: http://www.linkedin.com/in/michaelwyland "I never considered a difference of opinion in politics, in religion, in philosophy, as cause for withdrawing from a friend." - Thomas Jefferson to William Hamilton, April 22, 1800 From: Advancement Services Discussion List On Behalf Of Isaac Shalev Sent: Thursday, September 5, 2019 2:47 PM To: FUNDSVCS@LISTSERV.FUNDSVCS.ORG Subject: Re: [FUNDSVCS] Governing Board Is there some distinction between a higher ed Board of Governors vs a nonprofit Board of Directors that might create this distinction? In twenty years in the nonprofit field, I've never encountered the notion that mandatory board member gifts at NPOs, even at set amounts, are not tax deductible. Just the opposite, they're considered a best practice. Stanford Business had a survey showing over 40% of nonprofits had a give-or-get policy with a minimum number indicated (pdf link, page 4 bottom left - https://www.gsb.stanford.edu/sites/gsb/files/publication-pdf/cgri-survey-nonprofit-board-directors-2015.pdf). Many foundations and major donors won't support orgs that don't have 100% giving participation from board members. I would be astonished to learn that the IRS doesn't allow these gifts to be deducted. Folks should certainly consult their own advisers, but I did call my lawyer and he confirmed that in his opinion there's no issue with deducting those gifts. Thank you, Isaac Shalev CRM Expert Sage70, Inc. (917) 859-0151 isaac@sage70.com<mailto:isaac@sage70.com> Schedule a 30-minute consultation now: https://calendly.com/sage70/30min On Thu, Sep 5, 2019 at 1:57 PM Bob Swanson <rswanso@bgsu.edu<mailto:rswanso@bgsu.edu>> wrote: I am in agreement with Michael’s comments regarding the tax deductibility of a required donation in order to retain you Board position. It would be difficult to deduct and then defend when audited. Bob Swanson, CPA Controller Bowling Green State University 1851 N. Research Drive Bowling Green, Ohio 43403 rswanso@bgsu.edu<mailto:rswanso@bgsu.edu> w 419.372.8597 From: Advancement Services Discussion List <FUNDSVCS@LISTSERV.FUNDSVCS.ORG<mailto:FUNDSVCS@LISTSERV.FUNDSVCS.ORG>> On Behalf Of Michael Wyland Sent: Thursday, September 5, 2019 1:52 PM To: FUNDSVCS@LISTSERV.FUNDSVCS.ORG<mailto:FUNDSVCS@LISTSERV.FUNDSVCS.ORG> Subject: [EXTERNAL] Re: [FUNDSVCS] Governing Board Isaac and Angela: The CASE rules may be the same regardless of whether a board gift is voluntary or prescribed, but the IRS may take a different view and that different view may affect gift receipting by the institution. I like the "top three giving priorities" approach that Isaac describes, or the "meaningful gift" criterion that Jerrold Panas advocated. This approach not only expands the pool of potential board members, but it also makes the expectation of support sufficiently fluid as to avoid the appearance (or fact) of a quid pro quo transaction. Setting a specific dollar amount or threshold contribution may nullify the donor's ability to deduct the gift as a charitable contribution because it becomes a transaction rather than a gift motivated primarily or exclusively by philanthropic intent. [S&W_clr-small] Michael L. Wyland Sumption & Wyland 818 South Hawthorne Avenue Sioux Falls, South Dakota 57104-4537 (605) 336-0244 or (888) 4-SUMPTION Web site: http://www.sumptionandwyland.com LinkedIn Profile: http://www.linkedin.com/in/michaelwyland "I never considered a difference of opinion in politics, in religion, in philosophy, as cause for withdrawing from a friend." - Thomas Jefferson to William Hamilton, April 22, 1800

John's point is well-taken, but more in the context of vendor contributions. Applying this to board members and their donations is novel. At this point we're all engaging in speculation. What we know is that the policy of minimum gifts is pretty widespread and we are not aware of any enforcement or specific ruling that suggests that these gifts are not tax deductible. In the absence of any black letter guidance, everyone is going to turn to their professional advisers. I've conferred with my team and I stand by their advice. That said, I'll be monitoring this and if I come across anything definitive, one way or the other I'd be glad to update this group. On Sun, Sep 8, 2019, 11:42 AM Michael Wyland <michael@sumptionandwyland.com> wrote: > Isaac: > > > > I thank John for his brief but accurate entry into this discussion. I'll > answer one additional point you made in your most recent post. > > > > Becoming a board member of a charitable entity is both a responsibility > and an honor. It carries with it both unique fiduciary duties (both > financial and nonfinancial) and unique power and authority. There is no > question that being a board member is something of value, for several > reasons: > > > > -- unique ability to influence the vision, mission, and strategic > direction of the organization > > -- unique ability to influence the selection and retention of the top > management official (CEO/ED) > > -- unique access to internal and proprietary information about the > organization > > -- benefit from the status and identification of leadership generally and > specific leadership of the specific organization > > -- sometimes, consequential benefit for satisfying employment > requirements for community involvement > > -- opportunity to receive both internal and external recognition for > board service that is not available, or as readily available, to other > volunteers and donors > > > > I may be forgetting several other benefits, but I'm sure you get the > idea. > > > > Michael > > > > > > [image: S&W_clr-small] > > Michael L. Wyland > > Sumption & Wyland > > 818 South Hawthorne Avenue > > Sioux Falls, South Dakota 57104-4537 > > (605) 336-0244 or (888) 4-SUMPTION > > > > Web site: http://www.sumptionandwyland.com > > LinkedIn Profile: http://www.linkedin.com/in/michaelwyland > > > > *"I never considered a difference of opinion in politics, in religion, in > philosophy, as cause for withdrawing from a friend." - Thomas Jefferson to > William Hamilton, April 22, 1800* >

Isaac: I thank John for his brief but accurate entry into this discussion. I'll answer one additional point you made in your most recent post. Becoming a board member of a charitable entity is both a responsibility and an honor. It carries with it both unique fiduciary duties (both financial and nonfinancial) and unique power and authority. There is no question that being a board member is something of value, for several reasons: -- unique ability to influence the vision, mission, and strategic direction of the organization -- unique ability to influence the selection and retention of the top management official (CEO/ED) -- unique access to internal and proprietary information about the organization -- benefit from the status and identification of leadership generally and specific leadership of the specific organization -- sometimes, consequential benefit for satisfying employment requirements for community involvement -- opportunity to receive both internal and external recognition for board service that is not available, or as readily available, to other volunteers and donors I may be forgetting several other benefits, but I'm sure you get the idea. Michael [S&W_clr-small] Michael L. Wyland Sumption & Wyland 818 South Hawthorne Avenue Sioux Falls, South Dakota 57104-4537 (605) 336-0244 or (888) 4-SUMPTION Web site: http://www.sumptionandwyland.com LinkedIn Profile: http://www.linkedin.com/in/michaelwyland "I never considered a difference of opinion in politics, in religion, in philosophy, as cause for withdrawing from a friend." - Thomas Jefferson to William Hamilton, April 22, 1800

like the “100% board giving” and the “top three giving” approach. I figured this is an area where It’s best to seek legal counsel to determine what approach would work best for us. I wanted to see what else was out there. Thank you all for you feedback and opinions. I appreciate every one of them. Angela Xulú Luna ’09, Director Advancement Services Whittier College Advancement 13406 Philadelphia Street // Whittier, CA 90608 T: 562.907.4221 From: Advancement Services Discussion List [mailto:FUNDSVCS@LISTSERV.FUNDSVCS.ORG] On Behalf Of Isaac Shalev Sent: Sunday, September 8, 2019 9:14 AM To: FUNDSVCS@LISTSERV.FUNDSVCS.ORG Subject: Re: [FUNDSVCS] Governing Board John's point is well-taken, but more in the context of vendor contributions. Applying this to board members and their donations is novel. At this point we're all engaging in speculation. What we know is that the policy of minimum gifts is pretty widespread and we are not aware of any enforcement or specific ruling that suggests that these gifts are not tax deductible. In the absence of any black letter guidance, everyone is going to turn to their professional advisers. I've conferred with my team and I stand by their advice. That said, I'll be monitoring this and if I come across anything definitive, one way or the other I'd be glad to update this group. On Sun, Sep 8, 2019, 11:42 AM Michael Wyland <michael@sumptionandwyland.com<mailto:michael@sumptionandwyland.com>> wrote: Isaac: I thank John for his brief but accurate entry into this discussion. I'll answer one additional point you made in your most recent post. Becoming a board member of a charitable entity is both a responsibility and an honor. It carries with it both unique fiduciary duties (both financial and nonfinancial) and unique power and authority. There is no question that being a board member is something of value, for several reasons: -- unique ability to influence the vision, mission, and strategic direction of the organization -- unique ability to influence the selection and retention of the top management official (CEO/ED) -- unique access to internal and proprietary information about the organization -- benefit from the status and identification of leadership generally and specific leadership of the specific organization -- sometimes, consequential benefit for satisfying employment requirements for community involvement -- opportunity to receive both internal and external recognition for board service that is not available, or as readily available, to other volunteers and donors I may be forgetting several other benefits, but I'm sure you get the idea. Michael [S&W_clr-small] Michael L. Wyland Sumption & Wyland 818 South Hawthorne Avenue Sioux Falls, South Dakota 57104-4537 (605) 336-0244 or (888) 4-SUMPTION Web site: http://www.sumptionandwyland.com LinkedIn Profile: http://www.linkedin.com/in/michaelwyland "I never considered a difference of opinion in politics, in religion, in philosophy, as cause for withdrawing from a friend." - Thomas Jefferson to William Hamilton, April 22, 1800