FundSvcs Community

 View Only

  • 1.  In the event of self-dealing . . .

    Posted 11-07-2022 07:07 PM
    In the event, a donor makes a pledge to the institution and then payment comes from that donor's family/private foundation, what do you do? According to the IRS this is an act of self-dealing so what are the options to move forward with gift entry in compliance with IRS guidelines and accept the dollars? Is there some kind of documentation or something in writing to secure from the donor or foundation to make this acceptable? Can we simply write off the pledge and enter the foundation dollars as an outright gift? Other options?

    This feels like a multiple choice question I should already know the answer to so thank you to the hive mind,
    Leah

    ------------------------------
    Leah Richards
    Director of Advancement Services
    St. John Fisher College
    lrichards@sjfc.edu
    ------------------------------


  • 2.  RE: In the event of self-dealing . . .

    Posted 11-07-2022 07:22 PM
    It's not multiple-choice!

    You would probably handle this like a DAF.  Delete (or reduce) the original pledge and record the gift as an outright gift from the foundation.

    However, I will often contact the CFO or CPA overseeing the foundation's books - often held within a community foundation.  You may discover that the pledge should never have gone on the individual's record.  They may suggest a complete write-off and recording of a pledge from the foundation.

    Ensure that no benefits were awarded based on the pledge - and none for the foundation payment.

    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: In the event of self-dealing . . .

    Posted 11-08-2022 07:49 AM
    Haha, thanks John! I was convinced there would be one correct answer but I was hoping to improve my odds for getting it right by making it a multiple choice question. :)

    As a follow up question, what's a good way to prevent this beforehand? Should we be asking donors how they intend to pay off a pledge before finalizing a gift agreement to ensure the correct party is making the pledge? If so, is this just a verbal conversation or have you seen more formal processes in place to capture this info via standardized pledge/commitment forms filled out prior to the drafting of a legal gift agreement?

    Thank you very much for the quick response and pointing me to the right answer,
    Leah

    ------------------------------
    Leah Richards
    Director of Advancement Services
    St. John Fisher College
    lrichards@sjfc.edu
    ------------------------------

    Original Message


  • 4.  RE: In the event of self-dealing . . .

    Posted 11-08-2022 08:26 AM
    Yes, indeed, you should have that conversation with the donor in advance.  Your pledge agreement should reference this and require the donor to indicate whether they will be personally responsible for satisfying the pledge.

    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





    Original Message


Related Content