FundSvcs Community

Our organization received several checks related to legal settlement fees. The attorney conducted pro bono work at a community lawyering center and any associated settlement fees are donated to a nonprofit. I'm not even sure where to start with this. What questions do I need to ask? What backup documentation should I request? Is it even a donation?

Any guidance would be greatly appreciated! 

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Kim Jefferies
East Texas A&M University Foundation
kim.jefferies@etamu.edu
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Thank you, John. I've asked for clarification on who controlled the funds and if the designation to our Foundation was voluntary. I may have follow-up questions for the community but this has helped.

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Kim Jefferies
Texas A&M University-Commerce Foundation
kim.jefferies@tamuc.edu
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Original Message:
Sent: 09-16-2025 10:29 AM
From: John Taylor
Subject: Settlement Fees Related to Pro Bono Services: Is this a donation?

IRS rules state that for a gift to qualify as a charitable donation, it must be voluntary. You will find this stated in Publication 526.

We do not know the nature of the settlement or the circumstances under which you were identified as a beneficiary. If this had been a legal case where you were a plaintiff and the court ordered some kind of fee paid to you as part of a settlement, that would not be considered a gift. 

However, if these funds were randomly deposited in the community lawyering center, and the center had discretion over which local nonprofit organizations should receive these payments, I would argue that those payments were charitable.

John

John H. Taylor, Principal

John H. Taylor Consulting, LLC

2604 Sevier Street

Durham, NC     27705

johntaylorconsulting@gmail.com

919.816.5903 (cell/text)

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