FundSvcs Community

Hello All,

I encountered a situation this week where I'd love some industry experts to weigh in. I'm aware of the IRS Ruling regarding donor control (IRS Letter Ruling 9405003) but have encountered a situation where I'm wondering if there's a way to "meet in the middle" on a particular issue.

A private/individual donor who gave an endowed scholarship gift in memory of a deceased son, was heavily involved in the award selection process at the onset. The staff administering the award process seems to not have consulted best practices in their dealings with donors, and rather leaned heavily into relationship regardless of any legal implications. That being said, the Donor was allowed to help Select recipients of the Scholarship resulting from their gift. At this point the gift has been out of their hands for many years (a couple of decades) and we are working to establish a paper trail of the original gift, which seems to not have been recorded properly.

The staff involved in this incorrect procedure is now long gone, and the current staff are working to reestablish and strengthen donor relationships, and thus are actively addressing this issue. The donor wishes to be involved, however, I shared that there can be no donor control of the gift once it is given (which they likely received tax credit for many years ago). My question is this: As far as procedure goes, if we were to establish that WE the institution selects candidates, who then submit a reference letter or essay, and the essay or letter is reviewable by the donor, who potentially could have an option to approve of the candidates, is that the same as a donor controlling the use of the gift (the distinction here being that WE the institution selects the candidates out of a pool of applicants)? I'm really trying to meet in the middle on what was done incorrectly (not the donor's fault) and what we can feasibly (legally) work to do to serve the donor well and maintain the relationship (and theoretically there could be additional giving toward the fund from another donor family source).

I'm grateful for any precedent or wisdom you all can provide for this situation. 

Hello All,

I encountered a situation this week where I'd love some industry experts to weigh in. I'm aware of the IRS Ruling regarding donor control (IRS Letter Ruling 9405003) but have encountered a situation where I'm wondering if there's a way to "meet in the middle" on a particular issue.

A private/individual donor who gave an endowed scholarship gift in memory of a deceased son, was heavily involved in the award selection process at the onset. The staff administering the award process seems to not have consulted best practices in their dealings with donors, and rather leaned heavily into relationship regardless of any legal implications. That being said, the Donor was allowed to help Select recipients of the Scholarship resulting from their gift. At this point the gift has been out of their hands for many years (a couple of decades) and we are working to establish a paper trail of the original gift, which seems to not have been recorded properly.

The staff involved in this incorrect procedure is now long gone, and the current staff are working to reestablish and strengthen donor relationships, and thus are actively addressing this issue. The donor wishes to be involved, however, I shared that there can be no donor control of the gift once it is given (which they likely received tax credit for many years ago). My question is this: As far as procedure goes, if we were to establish that WE the institution selects candidates, who then submit a reference letter or essay, and the essay or letter is reviewable by the donor, who potentially could have an option to approve of the candidates, is that the same as a donor controlling the use of the gift (the distinction here being that WE the institution selects the candidates out of a pool of applicants)? I'm really trying to meet in the middle on what was done incorrectly (not the donor's fault) and what we can feasibly (legally) work to do to serve the donor well and maintain the relationship (and theoretically there could be additional giving toward the fund from another donor family source).

I'm grateful for any precedent or wisdom you all can provide for this situation. 

Thank you, John! I was hoping "influence" didn't constitute a violation. But, it's helpful to be informed of where the boundary lies. Are the CASE standards available in our aasp Library? 

Hello All,

I encountered a situation this week where I'd love some industry experts to weigh in. I'm aware of the IRS Ruling regarding donor control (IRS Letter Ruling 9405003) but have encountered a situation where I'm wondering if there's a way to "meet in the middle" on a particular issue.

A private/individual donor who gave an endowed scholarship gift in memory of a deceased son, was heavily involved in the award selection process at the onset. The staff administering the award process seems to not have consulted best practices in their dealings with donors, and rather leaned heavily into relationship regardless of any legal implications. That being said, the Donor was allowed to help Select recipients of the Scholarship resulting from their gift. At this point the gift has been out of their hands for many years (a couple of decades) and we are working to establish a paper trail of the original gift, which seems to not have been recorded properly.

The staff involved in this incorrect procedure is now long gone, and the current staff are working to reestablish and strengthen donor relationships, and thus are actively addressing this issue. The donor wishes to be involved, however, I shared that there can be no donor control of the gift once it is given (which they likely received tax credit for many years ago). My question is this: As far as procedure goes, if we were to establish that WE the institution selects candidates, who then submit a reference letter or essay, and the essay or letter is reviewable by the donor, who potentially could have an option to approve of the candidates, is that the same as a donor controlling the use of the gift (the distinction here being that WE the institution selects the candidates out of a pool of applicants)? I'm really trying to meet in the middle on what was done incorrectly (not the donor's fault) and what we can feasibly (legally) work to do to serve the donor well and maintain the relationship (and theoretically there could be additional giving toward the fund from another donor family source).

I'm grateful for any precedent or wisdom you all can provide for this situation. 

You have to purchase the Standards. But given the importance of the topic I am going to include those two paragraphs below (and let CASE know that I have).

Regardless of influence or control, it is something you don't want to permit.

John H. Taylor, Principal

John H. Taylor Consulting, LLC

2604 Sevier Street

Durham, NC     27705

johntaylorconsulting@gmail.com

919.816.5903 (cell/text)

Serving the Advancement Community Since 1987

Thank you, John! I was hoping "influence" didn't constitute a violation. But, it's helpful to be informed of where the boundary lies. Are the CASE standards available in our aasp Library? 

Hello All,

I encountered a situation this week where I'd love some industry experts to weigh in. I'm aware of the IRS Ruling regarding donor control (IRS Letter Ruling 9405003) but have encountered a situation where I'm wondering if there's a way to "meet in the middle" on a particular issue.

A private/individual donor who gave an endowed scholarship gift in memory of a deceased son, was heavily involved in the award selection process at the onset. The staff administering the award process seems to not have consulted best practices in their dealings with donors, and rather leaned heavily into relationship regardless of any legal implications. That being said, the Donor was allowed to help Select recipients of the Scholarship resulting from their gift. At this point the gift has been out of their hands for many years (a couple of decades) and we are working to establish a paper trail of the original gift, which seems to not have been recorded properly.

The staff involved in this incorrect procedure is now long gone, and the current staff are working to reestablish and strengthen donor relationships, and thus are actively addressing this issue. The donor wishes to be involved, however, I shared that there can be no donor control of the gift once it is given (which they likely received tax credit for many years ago). My question is this: As far as procedure goes, if we were to establish that WE the institution selects candidates, who then submit a reference letter or essay, and the essay or letter is reviewable by the donor, who potentially could have an option to approve of the candidates, is that the same as a donor controlling the use of the gift (the distinction here being that WE the institution selects the candidates out of a pool of applicants)? I'm really trying to meet in the middle on what was done incorrectly (not the donor's fault) and what we can feasibly (legally) work to do to serve the donor well and maintain the relationship (and theoretically there could be additional giving toward the fund from another donor family source).

I'm grateful for any precedent or wisdom you all can provide for this situation. 

Thank you, John! I found that publication almost at the same time you posted this -- this is so helpful! I see the publication online is dated April 2024. Is this an annually updated publication? (Would it be updated this month?)

You have to purchase the Standards. But given the importance of the topic I am going to include those two paragraphs below (and let CASE know that I have).

Regardless of influence or control, it is something you don't want to permit.

John H. Taylor, Principal

John H. Taylor Consulting, LLC

2604 Sevier Street

Durham, NC     27705

johntaylorconsulting@gmail.com

919.816.5903 (cell/text)

Serving the Advancement Community Since 1987

Thank you, John! I was hoping "influence" didn't constitute a violation. But, it's helpful to be informed of where the boundary lies. Are the CASE standards available in our aasp Library? 

Hello All,

I encountered a situation this week where I'd love some industry experts to weigh in. I'm aware of the IRS Ruling regarding donor control (IRS Letter Ruling 9405003) but have encountered a situation where I'm wondering if there's a way to "meet in the middle" on a particular issue.

A private/individual donor who gave an endowed scholarship gift in memory of a deceased son, was heavily involved in the award selection process at the onset. The staff administering the award process seems to not have consulted best practices in their dealings with donors, and rather leaned heavily into relationship regardless of any legal implications. That being said, the Donor was allowed to help Select recipients of the Scholarship resulting from their gift. At this point the gift has been out of their hands for many years (a couple of decades) and we are working to establish a paper trail of the original gift, which seems to not have been recorded properly.

The staff involved in this incorrect procedure is now long gone, and the current staff are working to reestablish and strengthen donor relationships, and thus are actively addressing this issue. The donor wishes to be involved, however, I shared that there can be no donor control of the gift once it is given (which they likely received tax credit for many years ago). My question is this: As far as procedure goes, if we were to establish that WE the institution selects candidates, who then submit a reference letter or essay, and the essay or letter is reviewable by the donor, who potentially could have an option to approve of the candidates, is that the same as a donor controlling the use of the gift (the distinction here being that WE the institution selects the candidates out of a pool of applicants)? I'm really trying to meet in the middle on what was done incorrectly (not the donor's fault) and what we can feasibly (legally) work to do to serve the donor well and maintain the relationship (and theoretically there could be additional giving toward the fund from another donor family source).

I'm grateful for any precedent or wisdom you all can provide for this situation. 

Thank you, John! I found that publication almost at the same time you posted this -- this is so helpful! I see the publication online is dated April 2024. Is this an annually updated publication? (Would it be updated this month?)

You have to purchase the Standards. But given the importance of the topic I am going to include those two paragraphs below (and let CASE know that I have).

Regardless of influence or control, it is something you don't want to permit.

John H. Taylor, Principal

John H. Taylor Consulting, LLC

2604 Sevier Street

Durham, NC     27705

johntaylorconsulting@gmail.com

919.816.5903 (cell/text)

Serving the Advancement Community Since 1987

Thank you, John! I was hoping "influence" didn't constitute a violation. But, it's helpful to be informed of where the boundary lies. Are the CASE standards available in our aasp Library? 

Hello All,

I encountered a situation this week where I'd love some industry experts to weigh in. I'm aware of the IRS Ruling regarding donor control (IRS Letter Ruling 9405003) but have encountered a situation where I'm wondering if there's a way to "meet in the middle" on a particular issue.

A private/individual donor who gave an endowed scholarship gift in memory of a deceased son, was heavily involved in the award selection process at the onset. The staff administering the award process seems to not have consulted best practices in their dealings with donors, and rather leaned heavily into relationship regardless of any legal implications. That being said, the Donor was allowed to help Select recipients of the Scholarship resulting from their gift. At this point the gift has been out of their hands for many years (a couple of decades) and we are working to establish a paper trail of the original gift, which seems to not have been recorded properly.

The staff involved in this incorrect procedure is now long gone, and the current staff are working to reestablish and strengthen donor relationships, and thus are actively addressing this issue. The donor wishes to be involved, however, I shared that there can be no donor control of the gift once it is given (which they likely received tax credit for many years ago). My question is this: As far as procedure goes, if we were to establish that WE the institution selects candidates, who then submit a reference letter or essay, and the essay or letter is reviewable by the donor, who potentially could have an option to approve of the candidates, is that the same as a donor controlling the use of the gift (the distinction here being that WE the institution selects the candidates out of a pool of applicants)? I'm really trying to meet in the middle on what was done incorrectly (not the donor's fault) and what we can feasibly (legally) work to do to serve the donor well and maintain the relationship (and theoretically there could be additional giving toward the fund from another donor family source).

I'm grateful for any precedent or wisdom you all can provide for this situation. 

Thank you, John! I found that publication almost at the same time you posted this -- this is so helpful! I see the publication online is dated April 2024. Is this an annually updated publication? (Would it be updated this month?)

You have to purchase the Standards. But given the importance of the topic I am going to include those two paragraphs below (and let CASE know that I have).

Regardless of influence or control, it is something you don't want to permit.

John H. Taylor, Principal

John H. Taylor Consulting, LLC

2604 Sevier Street

Durham, NC     27705

johntaylorconsulting@gmail.com

919.816.5903 (cell/text)

Serving the Advancement Community Since 1987

Thank you, John! I was hoping "influence" didn't constitute a violation. But, it's helpful to be informed of where the boundary lies. Are the CASE standards available in our aasp Library? 

Hello All,

I encountered a situation this week where I'd love some industry experts to weigh in. I'm aware of the IRS Ruling regarding donor control (IRS Letter Ruling 9405003) but have encountered a situation where I'm wondering if there's a way to "meet in the middle" on a particular issue.

A private/individual donor who gave an endowed scholarship gift in memory of a deceased son, was heavily involved in the award selection process at the onset. The staff administering the award process seems to not have consulted best practices in their dealings with donors, and rather leaned heavily into relationship regardless of any legal implications. That being said, the Donor was allowed to help Select recipients of the Scholarship resulting from their gift. At this point the gift has been out of their hands for many years (a couple of decades) and we are working to establish a paper trail of the original gift, which seems to not have been recorded properly.

The staff involved in this incorrect procedure is now long gone, and the current staff are working to reestablish and strengthen donor relationships, and thus are actively addressing this issue. The donor wishes to be involved, however, I shared that there can be no donor control of the gift once it is given (which they likely received tax credit for many years ago). My question is this: As far as procedure goes, if we were to establish that WE the institution selects candidates, who then submit a reference letter or essay, and the essay or letter is reviewable by the donor, who potentially could have an option to approve of the candidates, is that the same as a donor controlling the use of the gift (the distinction here being that WE the institution selects the candidates out of a pool of applicants)? I'm really trying to meet in the middle on what was done incorrectly (not the donor's fault) and what we can feasibly (legally) work to do to serve the donor well and maintain the relationship (and theoretically there could be additional giving toward the fund from another donor family source).

I'm grateful for any precedent or wisdom you all can provide for this situation. 

Excellent -- thanks for this helpful context. Securing my copy now!

Thank you, John! I found that publication almost at the same time you posted this -- this is so helpful! I see the publication online is dated April 2024. Is this an annually updated publication? (Would it be updated this month?)

You have to purchase the Standards. But given the importance of the topic I am going to include those two paragraphs below (and let CASE know that I have).

Regardless of influence or control, it is something you don't want to permit.

John H. Taylor, Principal

John H. Taylor Consulting, LLC

2604 Sevier Street

Durham, NC     27705

johntaylorconsulting@gmail.com

919.816.5903 (cell/text)

Serving the Advancement Community Since 1987

Thank you, John! I was hoping "influence" didn't constitute a violation. But, it's helpful to be informed of where the boundary lies. Are the CASE standards available in our aasp Library? 

Hello All,

I encountered a situation this week where I'd love some industry experts to weigh in. I'm aware of the IRS Ruling regarding donor control (IRS Letter Ruling 9405003) but have encountered a situation where I'm wondering if there's a way to "meet in the middle" on a particular issue.

A private/individual donor who gave an endowed scholarship gift in memory of a deceased son, was heavily involved in the award selection process at the onset. The staff administering the award process seems to not have consulted best practices in their dealings with donors, and rather leaned heavily into relationship regardless of any legal implications. That being said, the Donor was allowed to help Select recipients of the Scholarship resulting from their gift. At this point the gift has been out of their hands for many years (a couple of decades) and we are working to establish a paper trail of the original gift, which seems to not have been recorded properly.

The staff involved in this incorrect procedure is now long gone, and the current staff are working to reestablish and strengthen donor relationships, and thus are actively addressing this issue. The donor wishes to be involved, however, I shared that there can be no donor control of the gift once it is given (which they likely received tax credit for many years ago). My question is this: As far as procedure goes, if we were to establish that WE the institution selects candidates, who then submit a reference letter or essay, and the essay or letter is reviewable by the donor, who potentially could have an option to approve of the candidates, is that the same as a donor controlling the use of the gift (the distinction here being that WE the institution selects the candidates out of a pool of applicants)? I'm really trying to meet in the middle on what was done incorrectly (not the donor's fault) and what we can feasibly (legally) work to do to serve the donor well and maintain the relationship (and theoretically there could be additional giving toward the fund from another donor family source).

I'm grateful for any precedent or wisdom you all can provide for this situation.