It appears to be a conflict of interest if not outright self-dealing; but in addition, CASE guidelines state, "A donor may not retain any explicit or implicit control over the use of a gift after acceptance by the institution. "
Senior Director, Advancement Services
The University of Memphis
Hmmm. Haven't see one quite like this.
One issue may just have to do with language. A "gift to a student" wouldn't be deductible. A gift to the university to allow a student of the university's selection, in furtherance of the university's educational mission, to participate, might be, just as a "scholarship" given by a donor to a student isn't deductible, but a gift to the university who is able as a result to provide a scholarship to support a worthy student of its own selection often is.
That's essentially the issue of donor control. In this scenario, however, it sounds like it might be the case that the selection of the student participant is left with the University, who would have discretion to select a student "with demonstrated need for a study abroad experience." I'm not quite sure what that language means ("Riley really needs to get out of the country!"?), but I assume that it means something like the student not otherwise being able to afford to participate in the trip. Providing an educational study abroad experience to a student who would not otherwise be able to participate sounds like it supports the educational mission of the university, if the university has discretion to select the participant. That all would seem fine to me. Even narrowing it down to students who would participate in one of the trips that the company plans wouldn't necessarily negate the educational purpose; a donor would be free to support participation in certain study-abroad experiences, just as a donor would be free to provide scholarship to students with a certain major or from a certain state.
This also isn't quite the same as the intern-who-has-to-go-to-work-for-the-company scenario, it seems to me. Participation in the trip isn't some additional, contractual relationship that the student is required to agree to, it's exactly the educational experience that is being supported.
I also wouldn't be too concerned about the "charitable class" issue. Unless I'm misunderstanding the scenario, there are a variety of different study abroad experiences that would qualify (the company "plans many of our international student trips"), and more or less any student would be able to participate in one or another of the trips (if they could afford to do so). If you started with only students who already signed up as the eligible population, that might be an issue of a limited/fixed class, but that would also seem contrary to the inferred purpose of enabling a student to participate who couldn't otherwise afford to do so.
The real question, for me, is the possible self-dealing/exchange/quid pro quo aspect of the arrangement. That would depend on the details of the arrangement. I'm not sure what it means that the company "plans" the international student trips. If the company made a contribution of, say, the full cost of the trip and received a tax deduction and then the university gave the funds to the student who turned around and paid that fee back to the company, that would seem to be a problem. If, on the other hand, the company is paid a flat fee to "plan" the trips as a facilitator and none of the participant cost supported by the gift goes back to the company, that would seem to be fine. There are probably all sorts of scenarios between those two extremes.
In any case, I would want to look closely at what, if anything, the company receives in consideration of their gift. If, in fact, the company would receive back their gift as a payment for the trip, that wouldn't be tax-deductible, I wouldn't think, but might be OK if there's no issue of tax-deductibility in the mix (or the company could just provide the trip gratis as a gift of services, with no deduction involved there either, obviously). There might also be complications related to financial aid rules, I guess, so that would also be worth checking out.
The charitable assumption is that this is a generous impulse by a company that has first-hand experience of the value of a study-abroad experience and wants to make that experience available to a student who might not otherwise be able financially to participate. Which is great. Whether the arrangement also qualifies the company for a tax deduction for a charitable contribution is another matter, and probably warrants some close scrutiny.
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