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Is gift for earmarked computer deductible?

Your Legal Questions Answered

Is gift for earmarked computer deductible?

A donor wishes to pay for a new computer for a partner and wants our charity to gift the computer to the partner, which would be within the scope of our mission.  The donor would make a cash contribution to our charity and then ask us to buy the computer for the same amount.  Is this legal?  Is it a restricted gift (it was verbally, but not in writing)?  Or if nothing was in writing, is it a general gift and is the expenditure treated as any other to be voted on by the board?  

This is a sham and I wouldn’t get involved with it.  It doesn’t work.

If your donor makes a contribution on the understanding that it will be used to buy a computer that will be given to a designated person, that is effectively an earmarked gift to an individual and is not a charitable contribution.  The fact that the understanding is not in writing doesn’t make any difference if that was the deal.  You couldn’t legitimately give a substantiation letter saying that the donor did not receive any goods or services in return for the gift.  Let the donor buy the computer and make the gift without involving your organization.  It has no role in the transaction other than to give the appearance of a charitable contribution which isn’t real.

Tuesday, January 19, 2016

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