FundSvcs Community

If it is a credit card gift, it counts when you process it.

Michael S. Dotson, PhD, bCRE-Pro

Senior Director of Advancement Services

Office of Advancement

AUGUSTA UNIVERSITY

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Augusta, GA 30912

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As others have said, two donors can each fill out your reply device, put it in the mail prior to December 31^st, and have it received after December 31^st, except that one wrote a check and the other provided credit card information.  The donor who wrote a check has made a gift in the previous year, but the donor who provided credit card information did not, because a credit card gift is only considered complete when the charge is processed against the donor's account ("Contributions charged on your bank credit card are deductible in the year you make the charge.").

This treatment (which is stated explicitly in IRS Publication 526, as quoted above and below) is an application of the general rule that a charitable contribution is made "at the time of its unconditional delivery."  Once the donor writes a check and puts it in the mail, the check, which is considered the instrument of the gift, is considered to be outside the donor's control (which is why delivery by other means is treated differently).  The application to the credit card gift is that the gift-the funds-have not been delivered to the donee until the charge is processed.

This is similar to the treatment of stock gifts, where gifts of paper certificates are considered complete when the certificate and the stock power have been mailed to the charity, but electronic DT transfers are not complete until the shares are in the charity's account.  It has to do with when the actual gift has been delivered to the charity, rather than when instructions or authorization has been delivered to the charity.

(Historically, this treatment of credit card gifts is an improvement over the older treatment of credit card gifts, which was that the gift wasn't complete until the donor paid off the charge by making their credit card account payment.)

If the IRS accepts taxes that are mailed on April 15 (by mailed, "postmarked"), why can't we accept (and count) donations in the current calendar year if postmarked by/on Dec 31? That's how it's been done at every college or non-profit where I have worked. 

Rose

You can, for checks.

The tax return analogy is interesting.  When you put your tax return in the mail, your tax return is complete, and it's left your control-it's been unconditionally delivered.  If you owe taxes, and you include your check paying the taxes due, that check has also left your control.

It's different for credit cards.  It's like what you put in the mail by April 15^th was your instructions telling someone to submit your tax return.

It's also worth noting that the IRS doesn't let you submit your returns by mailing your completed tax forms by April 15^th along with information about charging your credit card for any balance due.

If you submit your taxes electronically and have a balance due, you've only paid your taxes on time if the online process debits your bank account by the date that the taxes are due.  If your tax filing software gives you the option of a credit card payment (usually for an added fee), your taxes are only paid on time if your card is charged and the money is transferred to the IRS by the date that the taxes are due. 

It's the same issue, really.  The credit card piece only counts when the card is actually charged.