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Is it a tax-deductible donation?

  • 1.  Is it a tax-deductible donation?

    Posted 15 days ago

    Hi all,

    I have an inquiry -- I'm sure there's a precedent and best practice for this, but I'm not sure what to call it or how to search it in Knowledgebase. I got this message from some student Residence Life staff on our campus:

    "We have an upcoming event focused on raising funds for local businesses. All donations will be pooled and awarded to the winning floor's charity of choice."

    The student rep went on to say that a select few "businesses" and "charities" would be the possible candidates to receive the funds. From the list that was provided, one of the "businesses" might turn out to be a nonprofit, but I'm looking into it. Also, the university in theory would also set aside an amount to go into the "pool" of funds to be given away, and local businesses would be asked to "donate" toward the unspecified cause.

    I'm sure at heart this is a good idea but it seems to be gone about in a somewhat messy way, and I'd like to come back with some ideas of how they can accomplish this rather than a flat "no" because the don't have the details in place. 

    I'm also concerned with the possibility of a letter being drafted by someone outside my office promising something like a tax-deduction if that isn't something that we actually can offer.

    I appreciate any wisdom or precedent the community has to offer!



    ------------------------------
    Melissa Rufener
    Life Pacific University
    mrufener@lifepacific.edu
    ------------------------------


  • 2.  RE: Is it a tax-deductible donation?

    Posted 15 days ago
    While the notion in spirit is valid, a tax deduction isn't available under the current structure. Even if the floor selects a nonprofit, the donors would not be making a gift knowing you were serving as a pass-through to that nonprofit.

    I am also confused about why you want to raise money for "local businesses," unless by "businesses," you mean strictly 501c3 organizations.

    I also worry about your donors being confused by a "fundraiser" sponsored by your University, believing they were satisfying their annual fund contribution by donating to this effort. These fundraising efforts must be coordinated.

    Situations like these point to the need for a Third-Party Fundraising Policy. Sometimes, you have to say no. Other times, if the students work with you in advance, you can create a way to make at least a portion of the donation deductible.

    For instance, if you want to support this project, you could require 50% of the funds raised to go to the Life Pacific Annual Fund - or an LP general scholarship fund. The other 50% could be "promised" to go to a qualified charity for whom you would act as an agent.

    However, without any specific cause and no guarantee the beneficiary would qualify to receive a tax-deductible contribution, I'd have to say "no." Counsel also might not allow the use of the LP name or logo.

    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






  • 3.  RE: Is it a tax-deductible donation?

    Posted 15 days ago

    Thanks John. Do you have an example of a Third-Party Fundraising Policy? Or is there one in our aasp archives I could reference?



    ------------------------------
    Melissa Rufener
    Life Pacific University
    mrufener@lifepacific.edu
    ------------------------------



  • 4.  RE: Is it a tax-deductible donation?

    Posted 15 days ago
    The ones I have written are proprietary. However, there are oodles on the Web.

    I'd search for those that include an application form. That is where it all begins-the external units must "apply" to conduct fundraisers and can do so only with your permission.

    Case Western has a "toolkit" worth checking out:


    Lewis & Clark has a policy focused on crowdfunding. However, I like their student fundraising application form:


    Here's another good policy that addresses the approval and coordination process I discussed. Unfortunately, their application form is behind their firewall - but the policy does not:


    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







  • 5.  RE: Is it a tax-deductible donation?

    Posted 15 days ago

    Thank you John! These are great resources!!



    ------------------------------
    Melissa Rufener
    Life Pacific University
    mrufener@lifepacific.edu
    ------------------------------