Published on Tuesday, March 16, 2010 14:38
The Office of Institutional Advancement (IA) coordinates fundraising activities of the College. The following information is meant as a guide for some frequent issues and questions regarding fundraising, but is certainly not exhaustive. Please do not hesitate to contact IA for more information if you have further questions after reviewing this guide.
Quid Pro Quo Gifts (Latin for "something for something")
In the case of a quid pro quo gift, the donor receives or expects to receive something for their donation.
Example: A company is a "gold sponsor" for a charity golf tournament. For their sponsorship of $2,000, they are entitled to a free round of golf for four of their employees. The fair market value of each round of golf is $150.
In this case, the total gift is not deductible because a benefit was conferred to the donor for their gift. The amount of the allowed deduction would be $1,400 (the donation amount $2,000) less the fair market value of the items received in return ($600).
Even if the company did not send a foursome to play in the tournament, the gift would still not be fully deductible, as the test of deductibility is not whether right to admission or privileges is exercised, but whether that right was accepted or rejected (per Revenue Ruling 67-246). To preserve deductibility, the donor must decline any benefits and do so no later than when the gift is made.
In our above example, the company would need to phone or send a note, stating that they will not be utilizing the benefits associated with their gift. This must be done in advance of or at the time of the gift.
Similarly, any "benefit," (artwork, meals, College logo apparel, etc.) jeopardizes the deducibility of a gift unless the donor declines these benefits at the time of the gift.
An Exception on Premium Items
There are some low-cost items that may be given out to a donor as a thank you or "premium item." Items such as address labels, key chains, pins, pens, notepads, and others may qualify. In some cases a minimum gift amount may be needed to preserve deductibility. If you are planning to give a low-cost premium item to donors, please notify the Office of Institutional Advancement. Staff can assist you in determining if the item qualifies as a low-cost premium item and advise you on receipting if needed.
A popular and successful way to raise funds for student trips is to approach parents with a fundraising appeal. If parents are giving to a "pot" that will be equally divided among students, the gift is deductible.
For example, if Sally's parents give $500 towards the trip, and John's parents are unable to contribute, John and Sally must both derive some benefit/funding from the trip fund. Note: Parents may not "pay for" their child's trip and claim it a tax deduction. That is a trip fee that should be deposited into the department's account, but not gift receipted.
Private and Corporate Foundation Support
The Director of Corporation and Foundation Relations is the College contact person if you are interested in developing proposals to obtain outside funding from such organizations. See the College grants website for more information on the grant process and a copy of the grant proposal form.
Mailings and Other Fundraising
The College sends multiple fund appeals and other mailings to alumni, parents, community members, and friends of the College. Here are some helpful hints for maximizing the success of any fundraising that you do.
- Contact the IA office to let staff know about fundraising you plan to do. This will help us to be coordinated in our contact with our constituents. We will know what they are receiving, and we can make sure that we don't flood people with too much fundraising material, which make all our efforts less fruitful. The IA staff can advise on the timing of mailings or fundraising initiatives, can help with data needs, and can share samples or design ideas that have worked well for the annual fund (if desired.)
- All gifts need to be receipted in Advancement Services so the donor has proper documentation of the gift (trip fees, etc. are deposited in the department's account). Also, we do not want to send a letter, saying that our records indicate that a donor has not made a gift if they, in fact, have, through a department initiative.
- If you receive a donation from a community business, it may be deductible as a "gift in kind" with proper documentation.
- Making sure that gifts are receipted through Advancement Services means that your donors will be listed in the Report of Appreciation (Albion's honor roll of donors), which acknowledges donations to the College and encourages more gifts.
- Special fundraising events like auctions, raffles, phonathons, and others have special guidelines. Please contact the IA office to check into the IRS and legal considerations for these types of fundraising.
- Use the Request for Fundraising Activity Form as guide in developing your fundraising plan.
Although the College sends out a gift acknowledgement for every gift, donors really like knowing how they made a difference. A letter from your department or a handwritten note from a staff member or student is a great way to thank your donors and ensure future and increased gifts.