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  • 1.  No Refund Clause in Tax Receipts

    Posted 5 days ago

    Good morning,

    We are doing a small initiative in which our donors receive a building block (like legos) of our mascot in return for a donation. We have everything worked out as far as the premium portion goes, but the annual giving team is asking to put a 'No Refunds' clause on our tax receipt for these gifts. This is not something we have done in the past and we have been going back and forth on both why and why not to do this.

    Does anyone include a 'no refund' clause on their tax receipt? If so, would you be willing to share the language for it? Or, does anyone have an advice on why or why not to include it? Although it seems like a small thing to add it, we just want to be sure we are doing what is best for both us and the donor.

    Thank you!



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    Colleen Deal
    Appalachian State University
    dealcf@appstate.edu
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  • 2.  RE: No Refund Clause in Tax Receipts

    Posted 5 days ago
    The reasoning for no refunds language, in the context of a QPQ setting like a gala or premium program, is that it solves for a bunch of thorny issues. Basically, donations are generally non-refundable because they are not exchanges, and once the donor has surrendered the funds, those funds are held in charitable trust for the public good, and cannot be spent on a donor. The exceptions to this are for genuine errors, and for cases in which the charity's leadership determines that it is in the best interest of the organization (and by implication, at least, the public trust) to return the money. For example, returning donations from a disgraced public figure is one example, or returning a contribution from a long-time major donor so as not to spoil future gifts is another. 

    If a contribution, in a QPQ setting, is refundable, it risks recharacterizing all such contributions as exchanges, not gifts. There are also issues with premiums. When a gift includes a premium, the value of that premium, when delivered immediately, can exceed the value of the initial payment. This creates timing issues in recognizing revenue. It also gets more complicated if the premiums can't be returned or it is not feasible to return them.

    Stating that there are no refunds simplifies all of this substantially - though I have seen the statement at the point of sale/donation, rather than as part of the charitable receipt. 

    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:




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