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Event Invitations

  • 1.  Event Invitations

    Posted 16 days ago
    Hi All Knowing ListServ!

    After reviewing the Annual IRS Update webinar, we've been discussing our alumni and donor events and want to ensure we're in compliance with all laws and regulations. What are the standards other institutions are using in regards to donor recognition dinners, scholarship luncheons, etc.? If I'm understanding things correctly, we can hold events with free admission if anyone off the street can attend, like Homecoming, but if only specific donors are invited to an event then we have to provide QPQ tax language and charge a ticket price that has a FMV that doesn't exceed 2% of the lowest gift used for invite criteria, or $113, whichever is less. Please let me know if I'm completely wrong.

    Thank you!

    ------------------------------
    Kali Anderson
    Director of Advancement Services and Prospect Management
    Husson University
    andersonka@husson.edu
    ------------------------------


  • 2.  RE: Event Invitations

    Posted 16 days ago
    Well, you never have to "charge" anything.  You can invite folk for free, too.  But if the invitation is based on what donors have contributed, then you are correct.  You must subtract that FMV from the gift amount.

    However, if you charge anyone who wants to attend an amount to come to the event, then there isn't any QPQ because no one is getting anything for free.

    You will want to get an opinion from your attorney regarding whether you can only send invitations to donors even if they have to pay to attend.  Some will suggest that you can do that, as long as you can demonstrate that non-donors can also offer to pay to attend.

    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: Event Invitations

    Posted 16 days ago
    Oh - and don't forget that you cannot invite DAF and private foundation donors to any event that has a FMV.  The only benefits they can receive are token "low cost" items with a cumulative value of $11.30.

    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







  • 4.  RE: Event Invitations

    Posted 16 days ago
    I have to ask...are organizations really following these guidelines?  I cannot imagine that all leadership giving events have been adjusted to comply.  
    I'm not trying to poke the bear, just curious what the reality is.

    Tina Gorski-Strong, P '23
    Chief Advancement Officer
    Bancroft School
    508.854.9201
    Pronouns: she, her, hers

    Please make your gift by June 30!
    Every Donor Counts!

    "Some people are never going to clap for you. Win anyway."







  • 5.  RE: Event Invitations

    Posted 16 days ago
    Some do not.  Of course, all we can do is point out the IRS regulations and have a conversation with Counsel - that is the only official who can or should advise you to disobey an IRS regulation.

    But I do see more and more institutions doing a better job of either complying with these laws or finding other experiential activities that have no FMV with which to thank their donors.

    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: Event Invitations

    Posted 16 days ago
    Thanks John.  If you can share any of the institutions that are doing these types of events that would be great.  I'd be curious what they entail.
    Tina


    Tina Gorski-Strong, P '23
    Chief Advancement Officer
    Bancroft School
    508.854.9201
    Pronouns: she, her, hers

    Please make your gift by June 30!
    Every Donor Counts!

    "Some people are never going to clap for you. Win anyway."







  • 7.  RE: Event Invitations

    Posted 16 days ago
    I will have to let those folk speak for themselves.  I do have clients that do their best to comply.  Others have found it difficult to shut them down completely and have obtained a written statement from counsel acknowledging the effort to comply.

    However, when I was at Duke we completely eliminated these "free" events in the mid-1990s when the IRS created the current substantiation rules.  I cannot tell you whether that remains the case.

    When I was at NC State my Vice Chancellor insisted that we adhere to both CASE and IRS rules and regulations.  And so we moved toward full compliance.  The one area we had not yet completely tackled when I left in 2013 was our lifetime giving events.  However, we did begin a significant cutback on those and did introduce the experiential event (such as behind-the-scenes tours) for some of those.  Again, I do not know what the current activities entail.

    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: Event Invitations

    Posted 15 days ago
    Thank you, John! 

    I'm sure this was already answered in your post, but the powers at be want the answer specific to a scenario for clarification... so if it's an event that we charge for attendance, does the charge have to be the FMV of the event--the example would be if it's a $25 dinner but we charge $15 to the public, is it still considered goods and services received.​

    ------------------------------
    Kali Anderson
    Director of Advancement Services
    Husson University
    andersonka@husson.edu
    ------------------------------



  • 9.  RE: Event Invitations

    Posted 15 days ago
    Kali, it depends on what you define as "the public."  I recall an IRS private letter ruling that denied a similar case because the organization extended invitations to a select or limited group.

    Just as we stated earlier about free events, you cannot give special consideration to folk because they are donors.  The entire community must be able to attend or purchase a ticket.

    And, in that case, I would never tie a ticket to the donation.  Just remind the donors that if they want to attend the community event which is open to anyone, they can purchase a ticket!

    Also keep in mind that as long as you tie the benefit to the gift - no matter how small the value - you can not provide the benefit to DAF or family foundation donors.

    John

    John H. Taylor 
    919.816.5903 (Cell/Text)

    Big Ideas; Small Keyboard





  • 10.  RE: Event Invitations

    Posted 15 days ago
    Thank you, John. I think we're getting the hang of it now. I greatly appreciate your guidance!

    ------------------------------
    Kali Anderson
    Director of Advancement Services
    Husson University
    andersonka@husson.edu
    ------------------------------



  • 11.  RE: Event Invitations

    Posted 15 days ago
    My apologies, our VP has one more question for clarification....

    We host a donor recognition dinner at $0 cost to participants.  Donors receive a mailed invitation.  Our website indicates that the event is open and the greater community is welcome to attend and help us celebrate those receiving recognition.  We also include information regarding the event in our emailed alumni and friends newsletter.  Two questions:

     

    1)      Does this eliminate the QPQ aspect of the free dinner for donors since, though they received a personal invitation, the event is advertised and made available to non-donors that are friends of University?

    2)      In this case can DAF or Family Foundation donors be included, as again, it is open to all to attend and we have advertised it as such?


    Thanks!

    ------------------------------
    Kali Anderson
    Director of Advancement Services and Prospect Management
    Husson University
    andersonka@husson.edu
    ------------------------------



  • 12.  RE: Event Invitations

    Posted 15 days ago
    Again, the answer depends on how "open" the event is.  If you advertise this in the local paper, your website, and over the air, I think you are in great shape!

    But if you keep the openness "secret" and issue invitations only by mail/email to a select group of constituents, then this likely won't fly.

    Whatever you do, your VP should be getting written confirmation that it is acceptable from Counsel.

    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







  • 13.  RE: Event Invitations

    Posted 15 days ago
    Adding to John's point, I think the lens to assess this is intent. John addressed the publicity of the invitation, and I'd extend this to the content of the marketing too. If your marketing language is all about inviting your donors, and you have a line at the bottom that says "this event is open to the public" I'm not sure that's a safe harbor.

    I would love to hear some clarification about determining FMVs for experiential events. I know that if a celebrity attends as a VIP, but doesn't perform in their celebrity capacity, there's no FMV. But I'm not sure why, given that plenty of people would pay to meet a celebrity under those circumstances. For a behind-the-scenes type event, I similarly think people would pay some amount for these types of tours. Is there any clearer guidance on FMVs here? 


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

    Schedule a 30-minute consultation now:







  • 14.  RE: Event Invitations

    Posted 15 days ago
    Thank you again for your feedback! This has been tremendously helpful.

    ------------------------------
    Kali Anderson
    Director of Advancement Services and Prospect Management
    Husson University
    andersonka@husson.edu
    ------------------------------



  • 15.  RE: Event Invitations

    Posted 15 days ago
    Issac, did you really ask why the IRS says what it says? :-).

    I do not have an answer.  And I agree with you that it does not makes sense why the presence of a celebrity doesn't make a difference.  However, I have reread two different IRS statements on the matter and they are consistent.

    The first place you will find this topic discussed is in the Final Substantial Regulations, paragraph 1.6115-1.  That's the section to goes into gory QPQ detail.

    Then, in 1997 the IRS included a discussion on this in the Exempt Organizations CPE training manual, chapter G.  Here's the full statement (which is almost verbatim what's stated in the Final Substantiation document:

    "Celebrity presence is another item that is treated as having no fair market value. Often celebrities will lend their presence to enhance the fundraising of a charity they support. The mere presence of celebrities need not be valued because, generally, it cannot be valued independently. See Proposed Reg. 1.6115-1(a)(3).

    "Illustration: A charity provides a contributor of $1,000 with a dinner for two followed by an evening tour of a museum. An artist, whose most recent works are on display at this museum, conducts the tour.
    Typically, tours at this museum are free. Because museum tours are free, the celebrity presence is treated as having no value and the charity need not value the tour. The museum, however, must provide
    a good faith estimate of the fair market value of the dinner for two.

    "In contrast, another charity provides a one-hour tennis lesson with a tennis professional in return for the first payment of $500 it receives. The tennis professional normally provides one-hour lessons for $100. Because the services of the tennis professional have a market and can be valued, the charity must provide to the contributor a good faith estimate ($100) of the fair market value of the one-hour lessons."

    I think the real key in all of this, Issac, is not that the presence of the celebrity doesn't have value - it's that the value cannot be determined.  See the phrase I have highlighted.

    While not an IRS statement, here's a related quote from a 2000 NAIS publication on charity auctions.  I should add that a Charity Auction Newsletter from 2002 echos these remarks:

    "A meal with a celebrity?

    "The mere presence of the celebrity does not enhance the item's value unless the celebrity's professional job is critical to the meal function. For example, the value of a dinner for 12 prepared by Jack Nicklaus at his home will be valued based on the cost of the food and wine only. However, the value of a dinner for 12 prepared by chef Jacques Pepin at his home will be valued based on the cost of the food and wine plus whatever he generally charges to cook."

    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







  • 16.  RE: Event Invitations

    Posted 11 days ago
    Thanks, John, great stuff as always. 


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

    Schedule a 30-minute consultation now:







  • 17.  RE: Event Invitations

    Posted 11 days ago
    Good morning, friends,

    We are a young organization and we have just learned that a donor has listed us in her will. This is the first time such a situation has arisen. We'd like to send her a letter thanking her for her intentions. Does anyone have an example of such a thing?

    Thanks in advance,
    Angi


    Angi Parks
    Advancement Services Manager
    The Oaks Academy, Indianapolis





  • 18.  RE: Event Invitations

    Posted 11 days ago
    Hi John, 
    The Director of Planning Giving has asked me to submit a question to you.  Here is the question:

    In making sure we are following IRS regulations, if someone has filled out planned giving paperwork this represents an expectation of a future gift.  However, there is no actual cash gift and these people do not receive any upfront tax credit for letting us know we are in their will.  We also are aware that the will can be changed at any time or beneficiaries can be changed.  Does the IRS include these people when offering a banquet or reception at no charge?

    Thank you.

    Corie



    ------------------------------
    Corie Pryor
    Coordinator of Advancement Services
    Truman State University
    cpryor@truman.edu
    ------------------------------



  • 19.  RE: Event Invitations

    Posted 11 days ago
    Hey there, Cory.

    To the best of my knowledge, the IRS issues regarding quid pro quo pertain only to benefits given in exchange for charitable contributions.  As there is no gift being processed for these - just as there isn't for a donor making a pledge (without paying) - then there isn't any receipt to issue.

    Although I do not see a QPQ event in the example you provide, you will want to run this case by your General Counsel.

    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