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book royalties

  • 1.  book royalties

    Posted 10-29-2019 07:00 AM
    We have had several University Faculty want their book royalties to be directed to our Foundation lately. If you have handled a situation like this, can you please let me know how you processed the royalty check?

    Thank you,
    Jolynn

    Jolynn Hall | Director of Special Projects and Gift Processing | University Advancement Operations

    UNC Charlotte | Foundation Building 106

    9201 University City Blvd | Charlotte, NC 28223

    Phone: 704-687-6159 | Fax: 704-687-7259

    jhall144@uncc.edu | www.uncc.edu



  • 2.  RE: book royalties

    Posted 10-29-2019 07:22 AM
    Coincidentally, this was a topic of discussion yesterday when I visited the CASE Gifts & Records Workshop here in DC.

    The best scenario, if the faculty want to claim a tax-deduction, is to receive and deposit the royalty checks and then turn around and make a gift to you.

    If they still want a deduction, but don't want the check and want the publisher to send their payments to you directly, that's possible, too.  But they will need to work those details out with the publisher and you will want to have confirmation that the faculty will receive 1099s for those payments which verifies it was their money to give.

    If they do not want a deduction then they need to waive those rights with the publisher and never recognize the income.  In theory those payments then become gifts from the publisher.

    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: book royalties

    Posted 10-29-2019 08:53 AM

    We do as John says. When people float this idea, I tell them they need to work with their publisher (or a lawyer) to assign the royalties to us. We will hard credit the publisher and soft the author. Otherwise – if they are seeking a tax deductible gift – they should continue to receive the royalties and make a gift therefrom. We haven't had situations where we get money directly from publisher, and the publisher continues to 1099 the author. I'm not sure how that would be managed or policed by us. And thus prefer the other paths.

     

    Aaron

     

    Aaron Forrest CPA

    Senior Director Gift and Donor Services

    University of Rochester Office of Advancement

    Larry and Cindy Bloch Alumni and Advancement Center

    300 East River Road

    Rochester NY 14627

    Office 585.275.2799 / Fax 585-273-4558

    Email aaron.forrest@rochester.edu

     

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  • 4.  RE: book royalties

    Posted 16 days ago
    We have a royalty check made payable to our university from the publisher for a book written by one of our professors. I don't really understand the ins and outs of royalties but my gut says royalties are paid based on an agreement between the writer of the book and the publisher. If the writer has the publisher make the check payable to the university I'm having a hard time thinking why this would be considered a gift. Doesn't the publisher have to pay the royalties? Doesn't seem philanthropic to me. Where did I go wrong?

    Thanks!

    Rob Saunders
    AVC, Advancement Operations
    UNC-Greensboro

    ------------------------------
    Robert Saunders
    Assistant Vice Chancellor, Advancement Operations
    UNC Greensboro
    robssaunders@gmail.com
    ------------------------------



  • 5.  RE: book royalties

    Posted 16 days ago
    You will need to communicate with either the author or the publisher - or both.  More often than not, authors will ask publishing houses to direct their royalties to a charity as a gift.  In these instances, the publishing house must still recognize the payment as income to the author by issuing 1099's to them.  However, the author does not physically have to take possession of the cash yet is still eligible for a gift receipt.

    Sometimes, though, an author will tell a publisher they do not wish to receive any payment for their book.  But, instead, they urge the publisher to make a voluntary donation to a suggested charity instead.  In such a case, the publisher is the donor and the author receives soft credit.

    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







  • 6.  RE: book royalties

    Posted 16 days ago
    John, in that latter case, does the analysis change if the author doesn't simply urge a voluntary donation, but makes an agreement to forgo their royalty rights in exchange for the publisher directing the contribution to a specific charity? It seems to me that the publisher would still have charitable intent. If their choice is between paying the author or accepting this new agreement, the only reason they would accept is because they're willing to contribute to the charity. The obligation isn't forced on them, they willingly accept it, just like any donor willingly accepts an obligation to give when they make a pledge.

    Now that most folks don't itemize, this strategy seems especially relevant. If I have a revenue stream that I can use to direct charitable contributions without recognizing the revenue myself, I can essentially create a synthetic deduction. Admittedly, the donor forgoes the hard credit, but that may be acceptable to the donor.


    Thank you,
    Isaac Shalev
    CRM Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:







  • 7.  RE: book royalties

    Posted 16 days ago
    You know, I cannot think of an instance when a publisher was even "forced" to pay a charity.  So I agree with you.  I think an argument can be made to treat 99% of these payments as charitable from either the author or the publisher.

    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







  • 8.  RE: book royalties

    Posted 16 days ago

    Timely. I am wondering how to handle these two different scenarios.

     

    1)     Donor dies and leaves future book royalties to University. Bequest hard credit to donor?

    2)     Donor is alive and assigns book royalties to University. Gift hard credit to publisher soft to author?

     

    Aaron

     

    Aaron Forrest CPA

    Senior Director Gift and Donor Services

    University of Rochester Office of Advancement

    Larry and Cindy Bloch Alumni and Advancement Center

    300 East River Road

    Rochester NY 14627

    Office 585.275.2799 / Fax 585-273-4558

    Email aaron.forrest@rochester.edu

     

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  • 9.  RE: book royalties

    Posted 16 days ago
    As indicated earlier, you will need to determine whether the publisher is treating the payment is income to the author/estate.  I think in the first instance that is fairly clear.  But in the second instance you need to ask.

    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







  • 10.  RE: book royalties

    Posted 16 days ago
    I ran it by a T&E lawyer. He said the publisher's contribution is charitable. However, he did raise the question of whether the IRS and the donor's state would consider the money constructively received by the donor. If so, the donor would be required to report it, and be taxed on it if they don't itemize. However, he felt that this was more a technical issue, and the right formal approach in setting this up would avoid this problem, and allow the donor to avoid recognizing the income.


    Thank you,
    Isaac Shalev
    CRM Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now: