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  • 1.  Revenue profit - QPQ

    Posted 06-02-2023 02:59 PM

    Happy Friday!

     

    How are institutions accounting for a profit derived from a QPQ gift? If an item costs us $8 to have produced, but the FMV is $17, do we need to account for that $9 anywhere?

     

    Thank you!

    Amanda

     

     

    Amanda L. Haney

    Director of Gift & Data Management

    Gift & Data Management

     

     

    University Advancement I Elliott Alumni Center I 9 Edgewood Rd I Durham, NH 03824

    Office: 603-862-2041 I amanda.haney@unh.edu

     

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  • 2.  RE: Revenue profit - QPQ

    Posted 06-02-2023 03:03 PM
    Can you offer more details? Are you saying that the vendor would normally charge you $17 but only charge you $8? If so, and that "charitable discount" is noted on the invoice, then it qualifies as a bargain sale and the difference is recorded as a GIK.

    If you are saying you paid $8 to have something made and then sold it on the "open market" at $17, then that's a sales profit.

    Or it could be something else! Details, please!

    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


  • 3.  RE: Revenue profit - QPQ

    Posted 06-02-2023 03:27 PM

    Sorry John ��

     

    Annual Giving is doing a 'give to get' for fiscal year end, the baseball hat costs us $8 to purchase from the vendor but the FMV was put at $17 based on research. If a donor makes a gift of $50 we are putting the $33 to the gift fund the donor selected and the $17 into the fund they paid for the items out of (I think!). Do they need to account for the difference anywhere?

     

    As always, thank you for your help!

     




    Original Message


  • 4.  RE: Revenue profit - QPQ

    Posted 06-02-2023 03:45 PM
    So, as I understand the scenario, the donors would receive a QPQ receipt indicating a payment of $50, a benefit of a $17 baseball hat, and a net deductible gift of $33.

    The fact you only paid $8 for the hat does not need to be accounted for anywhere in the fundraising system.

    If this happened to the bookstore, they'd sell the hat for $17 and realize a "sales revenue" of $9. You should talk to your Business Office about this. They may ask you to report the total gross revenue to them broken down by "sales" versus" gift. But that is their call.

    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


  • 5.  RE: Revenue profit - QPQ

    Posted 06-02-2023 04:06 PM

    That seems right to me.  In addition to the gift revenue, you have non-gift revenue that exceeds the cost of the premium. 

     

    This arises because the IRS looks at this from the perspective of the donor and what the donor would otherwise have paid to obtain the hat, so the non-gift part of the transaction is based on the Fair Market Value (FMV), not the cost, while the cost is based on, well, the cost!  There's no reason that those would match, and, in fact, would only match if you paid FMV for the hat.

     

    One could make an argument that the net revenue could also support the fundraising objective, along with the gift part, I would think, but that's a matter for internal discussion.

     

    My US$0.02 worth; the usual disclaimers apply.

     

    Good luck!

    Alan

     

    Alan S. Hejnal (he/him)

    Data Quality Manager

     

    SNAGHTML5cbfa34

     




    Original Message


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