year-end giving/receipting issues— 10 things you must know! year-end...dec 01, 2015  · – low...

Year-End Giving/Receipting

Issues—10 Things You Must

Know!

December 1, 2015 – ECFA.org

© ECFA 2015. All rights reserved.

Today’s Presenters

Dan BusbyPresidentECFA

John Van DrunenExecutive Vice President and General CounselECFA

Michael MartinVice President and Legal Counsel ECFA

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The Guide to Charitable Giving

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Church Law & Tax Resource

Christianity Today is offering a downloadable resource “2016 Charitable Contributions Bulletin Inserts” for a reasonable price. This insert will help your members give more by answering their charitable giving and tax law questions.

Click the following link: http://store.churchlawtodaystore.com/20chcobuin2.html

ECFA State of Giving ReportCash Contributions – Year-to-Year Change

1.7%

6.4%6.9%

6.1%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

2011 2012 2013 2014

Not adjusted for inflation

Enhancing Trust Email questions to Webinar@ECFA.org

ECFA State of Giving Report – Cash Contributions Year-to-Year Change by Annual

Revenue of All Members

Under $1 M $1-5 M $5-10 M $10-25 M $25-50 M Over $50 M2012-2013 1.1% 5.7% 5.8% 4.1% 6.3% 8.1%2013-2014 0.1% 2.0% 6.0% 5.5% 5.4% 7.1%

1.1%

5.7% 5.8%

4.1%

6.3%

8.1%

0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%9.0%

0.1%

6.0% 5.5%5.4%

7.1%

Not adjusted for inflation

2.0%

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• Previously allowed taxpayers age 70½ or older to give up to $100,000 from their IRAs and Roth IRAs to qualifying charities without having to pay income tax on the withdrawn amount

• Action to reinstate this provision retroactive to January 1, 2015 is expected before Congress adjourns

IRA Charitable Rollover

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• Remind givers of opportunities to donate

– Appreciated securities

– IRA charitable distributions

• Issue 2015 gift acknowledgements in an accurate and timely manner

• Review quid pro quo disclosures

Year-End Opportunities

See links 1 & 2

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ECFA Standard 7.3

“Every organization shall provide givers appropriate and timely gift

acknowledgments.”

See link 3

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• You don’t need a gift receipt if you make cash gifts.

• You can deduct the value of your time.

• You can deduct the rent-free use of property.

• It’s OK if you receive a gift acknowledgment after you file your tax return.

Common Gift Deduction Myths

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• How does the IRS define a charitable gift?

– “A donation or gift to, or for the use of, a qualified organization.”

– “Voluntary and is made without getting, or expecting to get, anything of equal value.”

“Gift” 101

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• Provides a framework to evaluate whether to accept a gift

– Is the gift useful to the organization and consistent with its purposes?

– Establishes guidelines in advance to deal with more complex gift forms

Gift Acceptance Policy

See link 4

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Receipting Gifts of Cash

• Single cash gifts of less than $250

– Gifts of currency in any amount require a gift receipt

– Otherwise, donor may substantiate by bank record (canceled check or bank/credit card statement), payroll deduction record, or proper gift acknowledgement

• Single cash gifts of $250 or more

– Donor must have a proper gift acknowledgement

See link 5

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Receipting Gifts of Cash

• When do givers need a gift acknowledgment?

– Givers need a charitable gift acknowledgment on or before the due date of their tax return (including extensions) OR the date their tax return is filed, whichever is earlier

– For good relations with givers, it is wise to provide gift acknowledgments

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Receipting Gifts of Cash

• When should churches or ministries issue gift acknowledgments?

– There is no required frequency

– Churches generally only issue gift acknowledgments periodically or at year-end

– Nonprofit practices more varied: gift-by-gift, year-end, or only if the $250 or more threshold is reached

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Receipting Gifts of Cash

• What information should be included on a gift receipt (in writing)?– Charity’s name (consistent with EO Select Check, if listed)– Giver’s name– Amount contributed– Statement of whether goods or services were provided

to giver in exchange for gift (quid pro quo disclosure and description, if applicable)

– Date the donation was made (could be otherwise confirmed)

– Date receipt was issued (recommended, but not required)

See link 6

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Special Noncash Gift Considerations

• Donor must obtain a proper acknowledgment for deductions of $250 or more (additional IRS forms may be required depending on the value of the noncash gift).

See link 6

• Out-of-pocket costs incurred by volunteers performing services are deductible.

See link 7

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Charities Are Not Appraisers

• Don’t succumb to the temptation to report the value of donated property on a contribution acknowledgment.

– You don’t know if the donor qualifies for a FMV deduction

– Your value may not be correct

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Who Is the Giver?

• Who is the giver for purposes of the gift acknowledgment?

– Generally, the giver is the person or entity named on the check/bank draft or the credit card holder

– For noncash gifts, it is generally the person or entity transferring ownership

– Exception: when a person is acting as an agent for others.

See link 8

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Timing for Deductibility

• Which year for tax-deductible receipt purposes?

– Timing measured by unconditional delivery

• “Delivery” date for checks– Generally date when mailed– Exceptions

• Postdated checks – not immediately payable and therefore it is a promise to pay on the date shown

• Checks that bounce for insufficient funds –not deemed to be delivered when mailed

See link 9

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Timing for Deductibility

• Credit card

– Delivery is not when mailed

– Delivery is when charge is made (processed)

• Text giving

• Internet giving

• Donor has the burden of demonstrating & documenting the timing

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Timing for Accounting

Which year for accounting purposes?• This is generally controlled by your organization’s

accounting policy• Some organizations with a calendar year end will

choose to hold the books open for a few days to recognize contributions that were mailed in prior year

• Needs to be consistently applied from year to year

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What if the giver benefits?

Charity ABC’sGolf Outing

andreceive

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Quid Pro Quo

• Tax-deductible portion equals the amount paid in excess of fair market value of what was received

• Fair market value ≠ cost to ministry

See links 10 & 11

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Quid Pro Quo Receipting Requirement

IF• Payment (not donation) of $75 or more, and• Goods or services are received by the donor in

exchangeTHEN

• Charity must inform donor of the limitation of the tax deductibility and provide good faith estimate of fair market value of the goods or services

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Quid Pro Quo Exceptions

No reporting necessary if:

• Insubstantial value

– Low cost items $10.50 [$10.60/2016] value for a gift of at least $52.50 [$53.00/2016] and item bears logo or name of organization, OR

– De minimis benefits 2% or $105.00 [$106/2016], whichever is less

• No donative element – sales type transactions

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No Gift Acknowledgement For…

• Donor’s time or services

• The part of the contribution from which a donor benefits

• Contribution to a specific individual

– Okay if donor does not indicate the contribution is for a specific person (ex. church benevolence fund)

See links 12 & 13

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Restricted Gift Issues

• Have you received funds for purposes narrower than your overall exempt purposes? If so, you likely have donor-restricted gifts.

• When acknowledging restricted gifts it is prudent to state the restriction on the gift acknowledgment.

• Be careful to use appropriate deputized fundraising language when acknowledging staff support.

See links 14 & 15

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Charitable Solicitation

• As you are working on acknowledgements its good to review any applicable charitable solicitation registration requirements for the coming year.

• Also good to confirm that any required disclosures are provided on donor communications, if required in states where you register.

• Multi-state filer project http://multistatefiling.org/See links 16 & 17

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Proposed Acknowledgement Substitute Filing

• Proposed, optional filing of donor acknowledgement with the IRS

• Organization would file donor acknowledgement information including SSN with the IRS and provide a copy to the donor

• Given the increased reporting and data gathering this would require its hard to imagine why an organization would opt for such a voluntary filing

• Proposed IRS REG – 138344-13 – Comments open until December 16, 2015

See link 18

Q & A Time!

Michael Martin

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Dan Busby John Van Drunen

Enhancing Trust Email questions to Webinar@ECFA.org

Enhancing Trust Email questions to Webinar@ECFA.org

Enhancing Trust Email questions to Webinar@ECFA.org

Enhancing Trust Email questions to Webinar@ECFA.org

Enhancing Trust Email questions to Webinar@ECFA.org

Enhancing Trust Email questions to Webinar@ECFA.org

Enhancing Trust Email questions to Webinar@ECFA.org