In general, when a donor receives something of value in consideration of a gift, it doesn't matter whether the benefit is provided the benefit by the organization or a third-party.
There is an example in Revenue Ruling 67-246 where a benefit was provided by a third party. In that particular example, the benefit is a transistor radio (!) provided by a local department store, but the discussion says, in part, "In determining the portion of the payment to a charitable organization which is deductible as a charitable contribution in these circumstances, the fair market value of any consideration received for the payment from any source must be subtracted from the total payment."
As you suggest-and as another example in Rev. Rul. 67-246 demonstrates-the chance to win a valuable prize resulting from a contribution is determined to have a value equal to the amount contribution required to receive that chance, so no portion of the contribution is deductible. "Amounts paid for chances to participate in raffles, lotteries, or similar drawings or to participate in puzzle or other contests for valuable prizes are not gifts in such circumstances, and therefore, do not qualify as deductible charitable contributions."
Those two example pretty much cover the ground: "Amounts paid for chances to participate in raffles, lotteries, or similar ... do not qualify as deductible charitable contributions" and "the fair market value of any consideration received for the payment from any source must be subtracted from the total payment."
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
Thank you, Alan – this is exactly what I was looking for. And thanks too to John for the conversation offline!
Karen Warr, MPA, GPC Director of Development Operations
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