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Gift-in-Kind? Donor-Paid Event Expenses & Use of Facility

  • 1.  Gift-in-Kind? Donor-Paid Event Expenses & Use of Facility

    Posted 3 days ago

    Hi colleagues,

    I would greatly appreciate this group's perspective. I'm encountering conflicting interpretations and would value your expertise.

    Our college is hosting its annual fashion show event at a regional mall owned by one of our trustees. The mall entity has offered to provide the following at no cost to the college:

    • Valet parking

    • Catering / drinks reception

    • Use of a private event space within the mall

    • Tangible merchandise for guest goodie bags

    It is currently unclear whether the donor expects any of these items to be acknowledged as in-kind charitable contributions.

    In researching IRS guidance, I'm seeing two interpretations:

    Broader interpretation:

    • Tangible goods are deductible as gifts-in-kind (FMV assigned by donor).

    • Donor-paid third-party vendor expenses (e.g., catering paid directly to a vendor on behalf of the charity) may qualify as charitable contributions if properly structured and documented.

    • The use of facilities itself is not deductible, but related out-of-pocket expenses may be.

    More conservative institutional approach:
    Some institutions take the position that if the charity does not control the funds or directly pay the vendor, the expense is treated as absorbed operational support - not a charitable contribution - and therefore not receipted as in-kind. This appears driven by audit risk and precedent management rather than explicit IRS prohibition.

    My questions:

    1. In the scenario above, which of these items would qualify as gift-in-kind contributions under IRS rules, and which would not? Why?

    2. Under what conditions do donor-paid third-party vendor expenses qualify as charitable contributions "to or for the use of" the charity?

    3. How do you treat donated use of event space versus related out-of-pocket costs?

    4. Does your institution receipt donor-paid vendor expenses, or decline to treat them as gifts even if technically permissible?

    5. Have you adopted a narrower institutional policy for risk or audit reasons? If so, is that becoming common practice in higher education?

    I'm trying to reconcile technical IRS permissibility with institutional risk posture and would be very grateful for your insight.

    Thank you in advance, this group's expertise is invaluable.



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    Kathryn Rusak
    College for Creative Studies
    krusak@collegeforcreativestudies.edu
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