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  • 1.  Gift Agreement Language: In the event of X, donor can request a refund

    Posted 05-31-2023 07:00 PM
    Greetings all!
    We have a donor requesting to add language to the gift agreement that details guidelines under which they could request a refund of the gift (i.e. loss of accreditation of "significant reputation").  
     
    Does anyone know whether such a clause in a gift agreement is legal or allowable under IRS regulation? Declaring the revocability of the gift seems contrary to the definition of a charitable deduction but we haven't found anything in IRS guidelines that says as much.
    Thanks in advance for sharing thoughts and knowledge!
    Leah


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    Leah Richards
    St. John Fisher University
    lrichards@sjf.edu
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  • 2.  RE: Gift Agreement Language: In the event of X, donor can request a refund

    Posted 05-31-2023 07:13 PM
    This language makes the gift revocable and therefore not deductible - or countable. See IRS Publication 526. A gift must be irrevocably given to be deductible and countable.

    Many grants have language that says you must return unused funds. In theory, those grants should not be counted until the finds are spent.

    John

    John H. Taylor 
    919.816.5903 (Cell/Text)

    Big Ideas; Small Keyboard



    Original Message


  • 3.  RE: Gift Agreement Language: In the event of X, donor can request a refund

    Posted 06-01-2023 12:52 PM
    As John said, irrevocability is the cornerstone of a gift. However, the specific language in your gift agreement should be carefully considered. For example, the donor may have a "right" to ask for a refund under some circumstances, but the right to ask for a refund is not the same as a right to receive a refund. Moreover, if your organization has a gift acceptance policy that outlines some process for considering refunds, a gift agreement could correspond with that language without materially changing the nature of the gift. 

    For a condition like you mentioned, such as loss of accreditation, it's the type of thing that some well-meaning adviser suggested be added to the agreement, without realizing that it would invalidate the gift. A call with the gift officer to clarify the issue and hear out the concerns could be a more fruitful approach than a technical solution.

    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: Gift Agreement Language: In the event of X, donor can request a refund

    Posted 06-01-2023 07:08 PM

    Thank you, John and Isaac. Your responses are so helpful! Sincere thanks, Leah



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    Leah Richards
    St. John Fisher University
    lrichards@sjf.edu
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    Original Message


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