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.
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.
Alan S. Hejnal
Data Quality Manager
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