FundSvcs Community

 View Only

  • 1.  Charitable Forgivable Loans

    Posted 06-04-2025 10:09 AM

    Happy Wednesday everyone!

    My challenge for today is a new one for me.  I am looking for information on philanthropic charitable loans.

    While I have some basic information, I am unclear how and when these funds may be counted.  Since the loan is not "forgiven" until the nonprofit has met all stipulated conditions, would tax receipt and counting only occur once that has happened?

    I'd love to know of any resources that could guide us in this process, especially information about when the loan can become countable and receipted for tax purposes.

    Thank you!



    ------------------------------
    Dale Hailey
    Sutter Health Philanthropy
    dale.hailey@sutterhealth.org
    ------------------------------


  • 2.  RE: Charitable Forgivable Loans

    Posted 06-04-2025 10:37 AM
    Can we assume that an individual or company has loaned you money? And that the loan is entered on your books as a liability (you owe the money back)? But the donor has indicated they may forgive all or a portion of the loan provided you meet specific requirements (and I hope those requirements are for things you would have done regardless)?

    If the above assumptions hold, there is nothing to count as a gift. Actually, you are "in the red" on the accounting side of the house because of the liability.

    At whatever point any portion of the loan is forgiven, that amount can be recognized as a gift. I am uncertain about any interest payments that you will have avoided and whether those could be recognized, also. You will need a tax advisor to weigh in.

    John

    John H. Taylor, Principal
    John H. Taylor Consulting, LLC
    2604 Sevier Street
    Durham, NC     27705

    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987




    Original Message


  • 3.  RE: Charitable Forgivable Loans

    Posted 06-04-2025 11:01 AM
    Under FASB ASC 958-605-25 (very technical pdf link here - see page 18 for paragraphs 5A-5F that address this directly) you cannot recognize a conditional charitable loan as a contribution until the conditions are met. Until then, the loan/grant is a liability (technically, a refundable advance) on your books. Once the conditions are fulfilled, or is explicitly waived by the donor, the loan is cancelled, and that's the moment of the charitable gift, the moment when the funds leave the control of the donor entirely. 

    I think there is room to consider counting differently, particularly for conditions that are almost certain to be met.

    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:




    Original Message


  • 4.  RE: Charitable Forgivable Loans

    Posted 06-04-2025 11:54 AM

    Super helpful.  Thank you Isaac and John.



    ------------------------------
    Dale Hailey
    Sutter Health Philanthropy
    dale.hailey@sutterhealth.org
    ------------------------------

    Original Message


Related Content