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  • 1.  Using an event to pay off a pledge

    Posted 02-23-2024 02:55 PM

    Scenario:

    1. Donor makes a $1 million pledge to organization X through their own personal Family Foundation
    2. Donor requests that organization X host a fundraising event in support of the same fund as the pledge
    3. Organization X agrees to the event and manages the event revenue collection, including tax receipting
    4. Donor requests that money raised from the event be applied/credited to their $1M pledge 

    Questions:

    Does anyone have experience with this scenario?

    Is this a legal and/or ethical avenue to pay off a pledge?

    Are there IRS guidelines or best practice literature that we can refer to when speaking with the donor?

    *cross posted in CASE*



    ------------------------------
    Sarah Petty
    Director of Development Operations
    LSU Health Foundation
    spetty@lsuhealthfoundation.org
    ------------------------------


  • 2.  RE: Using an event to pay off a pledge

    Posted 02-23-2024 03:55 PM
      |   view attached
    There is so much that is wrong with this scenario:
    • An individual cannot make a pledge that binds a third party. Only the private foundation can pledge the $1,000,000. The individual can only pledge their own personally held assets. See the attached white paper.
    • Whether the organization desires to conduct a fundraising event is its call. However, that cannot satisfy the obligation of an external party. You can only agree to remove the pledge and ask the donor to sign a new pledge agreement for the amount of funds they are personally committing.
    • Also, if the organization decides to conduct a fundraising event, it must be the organization's event with proceeds going to a specified fund, understanding that no one is personally benefitting. And satisfaction of a pledge is recognized by the IRS as a benefit.
    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




    Attachment(s)

    pdf
    2022 Who Can Make a Pledge.pdf   161 KB 1 version
    Original Message


  • 3.  RE: Using an event to pay off a pledge

    Posted 02-23-2024 04:01 PM

    Thank you so much! This is the information we needed to back up our conversation with a donor.



    ------------------------------
    Sarah Petty
    LSU Health Foundation
    spetty@lsuhealthfoundation.org
    ------------------------------

    Original Message


  • 4.  RE: Using an event to pay off a pledge

    Posted 02-23-2024 04:04 PM
    Groovy keen!

    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





    Original Message


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