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  • 1.  FMV on incentives for IRS Threshold

    Posted 11-13-2020 11:28 AM
    My annual giving officer and I have been digging for some definitive answer to this and keep finding conflicts.

    We are contemplating an incentive on a campaign.  We are going to ask for a $60 contribution to get the incentive.  We understand that the FMV of the incentive must be below $11.80 (or whatever that amount is that isn't at my fingertips at the moment).  The part where we are finding conflicts is what is all included in that FMV.

    Is it just the cost of the item from the dealer?
    Does it count the cost of the postage to mail the incentive to the donor?
    Does it count the cost of the envelope to mail the incentive to the donor?
    Does it count the cost of the note in the envelope and incentive to the donor?

    We accept that we may have calculated this incorrectly in the past.  As we work towards full compliance, we want to make sure we are shooting for the proper goal.  So, if anyone can point me in the direction of a definitive answer, that would be greatly appreciated.

    Joel

    ------------------------------
    Joel Clasemann
    Director of Advancement Services
    The College of Saint Scholastica
    jclasema@css.edu
    ------------------------------


  • 2.  RE: FMV on incentives for IRS Threshold

    Posted 11-13-2020 11:35 AM
    For these token items - $11.30 for 2021 - the value is understood to be what you would have paid wholesale.  Also, keep in mind that the $11.30 limit is for the combined value of all token items bestowed on the donor.

    Per the announcement I sent a few weeks ago, the IRS uses the word "costing" when defining the value.  But it is understood that if the items are donated to you the value must still be based on what you would have paid.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987






  • 3.  RE: FMV on incentives for IRS Threshold

    Posted 11-13-2020 11:55 AM
    Thanks.  I appreciate this feedback.

    Joel Clasemann - '96 & '08
    Director of Advancement Services

    + 218-723-6479
    + jclasema@css.edu





    Original Message


  • 4.  RE: FMV on incentives for IRS Threshold

    Posted 11-13-2020 12:01 PM
    Below is the relevant text from Rev. Proc. 2020-45:

    .34 Insubstantial Benefit Limitations for Contributions Associated with Charitable Fund-Raising Campaigns.

    (1) Low cost article. For taxable years beginning in 2021, for purposes of defining the term "unrelated trade or business" for certain exempt organizations under § 513(h)(2), "low cost articles" are articles costing $11.30 or less.

    (2) Other insubstantial benefits. For taxable years beginning in 2021, under § 170, the $5, $25, and $50 guidelines in section 3 of Rev. Proc. 90-12, 1990-1 C.B. 471 (as amplified by Rev. Proc. 92-49, 1992-1 C.B. 987, and modified by Rev. Proc. 92-102, 1992-2 C.B. 579), for the value of insubstantial benefits that may be received by a donor in return for a contribution, without causing the contribution to fail to be fully deductible, are $11.30, $56.50 and $113, respectively.

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987





    Original Message


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