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Another question regarding gift cards/gift certificates

  • 1.  Another question regarding gift cards/gift certificates

    Posted 24 days ago

    We have an upcoming golf tournament, and we have a donor that is giving us roughly 250 gift cards for a free oil change, valued at $39.99, to give to all of our golfers. We understand we can't book the services portion, but the donor has told us that the materials come to $25.00, which we would like to book in our system. In some of our research articles, it seems that the IRS makes no distinction between a gift card and a gift certificate (see below).  None of the articles mention the idea that a gift certificate can only be counted if "used" by someone who receives the gift certificate but instead equates the gift certificate to a cash gift.  Some have mentioned that we should only count as gifts, those gift certificates that have been "used" or turned in to the business.  We are leaning toward just booking the entire number of certificates as a "gift" – say 250 – or whatever number we pass out, but wondering if anyone has any support to do something different?

     

    Gift Cards and Gift Certificates

    As far as the IRS is concerned, donating a gift card or gift certificate to charity is the same as donating cash. You should list these along with other cash donations and keep the same records as you would if you'd written a check.



    ------------------------------
    Darrell Rainwater
    Director of Advancement Services
    California Baptist University
    drainwat@calbaptist.edu
    ------------------------------


  • 2.  RE: Another question regarding gift cards/gift certificates

    Posted 24 days ago
    These are only gifts if the donor is not the company that will be performing the oil change.  In that case the donation is considered "partial interest" and there is no gift - much like a hotel cannot claim a gift for donating a room for a few nights - or an airline a seat on a flight.

    If the donor is a private individual who purchased the gift cards, then the entire value is considered a gift regardless of the service component.  That private individual is not performing the service.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987






  • 3.  RE: Another question regarding gift cards/gift certificates

    Posted 24 days ago

    Hmmm.

     

    I'm used to thinking of a partial interest as something that the donee will have the use of, but not own, like, say, the use of a hotel room, or office space, or a car.

     

    In this case (assuming that the donor is the company that is providing the service, or its owner, or the like), is it not true that the university is receiving-in the form of a gift certificate-the property of the oil and oil filter (I assume), valued at $25, and the service of performing the service, valued, I guess, at $14.99, but which doesn't enter into the calculation of the gift to the university, as it is a service.  I'm not seeing a partial interest; the university, after all, does not have to give the oil and filter back!  (The donor company can probably only claim their deduction as the certificates are redeemed, but that's not our issue.)

     

    Now, from the point of view of the golf tournament participants, they are receiving a benefit with a fair market value at $39.99, which is what they would otherwise have to pay for the oil change, which is independent of the gift value that could be deducted by the donor.  And their deduction is limited by the value of the oil change whether they use the certificates or not, since they've accepted the right to the benefit.

     

    As John says, if the donor is not the company/owner that will be performing the oil change, what they are transferring is their property right in the oil changes, which you could record at their fair market value of $39.99 (and which the donor could deduct at the value of their basis in that property interest, which isn't our problem.) 

     

    My US$0.02 worth; the usual disclaimers apply.

     

    Good luck!

     

    Alan

     

    Alan S. Hejnal   

    Data Quality Manager

     

    SNAGHTML5cbfa34

     

    Smithsonian Institution - Office of Advancement

    600 Maryland Ave SW Ste 600E

    PO Box 37012, MRC 527

    Washington, DC 20013-7012

    Voice: 202-633-8754 | Email: HejnalA@si.edu                                                                                                                                            

     






  • 4.  RE: Another question regarding gift cards/gift certificates

    Posted 24 days ago
    You are right, Alan.  My examples were correct - but applied in the wrong way.  Is it obvious I have been on too many Zoom calls today? :-).

    So, what Alan said :-)

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987







  • 5.  RE: Another question regarding gift cards/gift certificates

    Posted 18 days ago
    Our VP wants to know if it makes sense to book all 250 at $25.00 in our database...thx, D

    ------------------------------
    Darrell Rainwater
    Director of Advancement Services
    California Baptist University
    drainwat@calbaptist.edu
    ------------------------------



  • 6.  RE: Another question regarding gift cards/gift certificates

    Posted 18 days ago
    Well, yes and no.

    I would record a gift of $6,250, but only as a gift-in-kind.  Whether that will be "booked" on your GL is something you will want to discuss with your Business Office.

    I've known the Business Office to be completely uninterested in booking "ins and outs" like these at many institutions.  That includes property gifts for auctions.  Other Business Offices only want to see GIKs valued at $5,000+ (for an individual item), as those often require additional IRS reporting.

    As an in-kind donation, your receipt should reflect only the contribution of the "250 gift cards valid for a free oil change" and not mention any value.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987