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Gift In Kind?

  • 1.  Gift In Kind?

    Posted 08-17-2021 11:01 AM
    Hello there,

    We have been asked if we would recognize a gift in kind from of tickets to certain events.  Here's the gift of it:  The donor sponsors the event, i.e. a celebrity gala, and in the course of sponsoring, they receive tickets to the event. They then turn around and donate those tickets to the us for a Dean to use and "for donor cultivation." There can be an assigned value placed on the tickets because the price to attend is very well known, however, the donor came to acquire these tickets based upon sponsoring not purchasing.  Is it appropriate to accept these tickets and credit the donor with an in kind gift for the face value of the tickets?  Would appreciate a gut check. Thank you!

    ------------------------------
    Nancy Vinje Jones
    Director of Gift Administration & Reporting
    Ball State University Foundation
    nvinjejones@bsu.edu
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  • 2.  RE: Gift In Kind?

    Posted 08-17-2021 12:55 PM
    Does this really happen a lot?  I hope not!

    But there's one "error" in what you are stating.  They are "buying" the tickets.  You must reduce the amount of the sponsorship by the FMV of the tickets and other benefits they receive.  In essence, they have "paid" for the tickets.

    Yes, you can issue in-kind credit for this if you want, provided the donated tickets can be used.  The receipt cannot reflect a value.  Only a description.  Or, the sponsor can refuse the tickets upfront and receive a full deduction.

    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: Gift In Kind?

    Posted 08-17-2021 01:05 PM
    Hi Nancy,

    This is not really donating anything back, it's declining benefits. If the donor chooses to decline the benefit of the tickets, the full value of their donation is treated as charitable. This would be better, from a tax perspective, than getting only GIK credit for those tickets. 

    If the donor was not given a quid-pro-quo receipt up-front, and the tickets were given to the donor for free, that needs to be fixed, either by the donor declining the tickets, with no further GIK credit, or by issuing a corrected receipt.

    If for whatever reason it's not possible or desirable to convert the gift into a straight donation, I suppose the tickets could be donated, but it seems like a bad idea to me. Maybe I'm suspicious by nature, but if the donor paid $500 for a ticket with a $50 non-gift value, they got a QPQ from you for $450. However, if they donate that ticket and get an in-kind receipt from you, they might then claim that this ticket was worth $500 and double-dip on the gift. Admittedly, this is between them, their tax adviser, and the IRS, but why enable such shenanigans when a perfectly good alternative of simply treating the donation as a straight gift exists?


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

    Schedule a 30-minute consultation now:






  • 4.  RE: Gift In Kind?

    Posted 08-17-2021 01:22 PM
    It seems functionally equivalent to "waiving benefits" and I could see giving them credit as long as they did not pick the recipient. But, many places require that benefits be waived before the tax receipt is issued (and before the event occurs) so you may not want to violate your own policy.

    Lesley Pratt, EdD