Question about receipting a membership, based on a pledge. Our museum has revamped their membership model, and as a result, only donors above $1,000 have any FMV/QPQ issues, which we are including on the donor receipt. (It's $65 for a dinner.)
The issue is that the museum would like to begin allowing donors who PLEDGE $1,000 to receive membership benefits, regardless of their payment schedule, on their first payment. It's a rolling 12-month membership, not FY or CY, and that $65 benefit, I believe, has to be recorded somewhere for the donor (or if they've opted out of the benefit altogether).
When we post the gift of $83 ($1000/12) do we include the QPQ value of $65, on the first receipt, and all other receipts for that membership, regardless of year, are 100% tax deductible? We only issue receipts for gifts, so I'm not sure how to fulfill the IRS rule about notifying the donor of the QPQ for the membership on a pledge.
I believe the alternative is just to include the information in the solicitation, which per https://www.irs.gov/pub/irs-pdf/p1771.pdf is okay, and skip the receipts altogether. Is that what everyone is doing? How then do you substantiate that you met the obligation with the solicitation? It's easy to re-generate the receipt when we've recorded the QPQ value, but not doing it at all seems dangerous – and while we typically code everyone with an appeal code who got a specific solicitation, the mailer may not be available in future if someone questions which value they used for their tax deduction.
Thanks! I hope this is something obvious that I'm just overlooking!
Aimee S. Fitzgerald, MLIS
Executive Director, Prospect Development and Gift Administration
William & Mary
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Thanks Isaac – interesting idea to use the pledge statement for the disclosure!
So if I understand correctly, you're saying that if we include the QPQ disclosure on the pledge statements, we don't need to include on the payment receipts for those donors – because we've met the IRS obligation with the solicitation, but are also being donor-centric by including the QPQ for the donor as they make their payments. But for everyone else who pays their membership outright, they get the QPQ disclosure on their individual receipt.
We're using Advance, and using the premium screens to track the QPQ value against any particular gift, and our receipt report pulls in the specific premium data, so it's not the receipt itself is the issue. I think the statement solution could work as long as we record the QPQ value via the premium screen on the pledge - and since they don't generate a receipt, it's all in one place.
Off to play some more with our data – I'm not 100% certain that the premium value will work on a pledge. If there are any Advance users who use it, thoughts would be helpful here too!
It might be helpful to keep in mind that there are two separate IRS requirements, the Written Disclosure requirement and the Written Acknowledgment (or Substantiation) requirement.
The Written Disclosure requirement applies to the donee, and it comes into play whenever the chartable organization conducts fundraising resulting in transactions of at least $75 that are part contribution and part non-contribution (exchange). The charity is then required to tell donors that their deductions are only partially deductible and to indicate the value of the goods or services (the part that is not deductible). That disclosure can be made in the solicitation materials or on the receipt.
There is an entirely separate Written Acknowledgment (or Substantiation) requirement that applies to the donor, and says that the donor cannot claim a charitable deduction of $250 or more unless they have a statement from the charitable recipient that identifies the contribution (the amount of a cash contribution, or a description of a non-cash contribution) and includes either a statement that no substantial goods or services were provided or provides a good-faith estimate of the goods or services that were provided plus a description of those goods or services. This statement can only be provided in response to the gift, since it has to identify the actual contribution. The requirement is placed on the donor, but of course it's the donee that has to provide the statement.
Both of these requirements can be met by a properly-constructed "receipt," but the written acknowledgement requirement can only be met by a receipt. That's not to say that it isn't a good practice to meet the Written Disclosure requirement both in the solicitation materials before the fact and a receipt after the fact, of course.
(In the interest of completeness, there is a separate "record-keeping" requirement that applies to cash contributions of any amount that is the donor's responsibility, but can also be fulfilled by a properly-constructed gift receipt from the charity.)
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