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How should we treat donors’ payment of fundraising costs?

Your Legal Questions Answered

How should we treat donors’ payment of fundraising costs?

We sometimes have donors pay the expenses for fundraising events held in their homes. We give them the option of having the bills sent directly to the charity for payment, and then we invoice the donor who makes a contribution in that amount.  In other cases, the donor pays the expenses directly and we treat this as an in-kind contribution. In both cases, we provide an acknowledgment letter showing the contribution and that they received no goods or services in exchange for the contribution. Are we okay offering both of these options?

I don’t see any reason why not.  A donor may claim a charitable contribution deduction for making a gift to or for the use of a charity.  Therefore, if you assume the obligation to pay the costs of the fundraiser, either giving you the money to pay them or paying the costs on your behalf would qualify as a contribution.

I don’t like the terminology of “invoicing” those who give you money to pay the costs because I don’t normally consider that paying an “invoice” is purely voluntary.  You might want to use more charitable language by suggesting a contribution to offset your costs.

In both cases, if your donor contributes $250 or more, the donor is required to obtain from you the kind of acknowledgment letter you describe.  It is obviously good policy to provide such a letter even if the contribution is less than $250, but the donor can claim the deduction without it.

Tuesday, October 16, 2018

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Comments

Donor should pay the invoices and recognize the cost of it.

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