FundSvcs Community

Expand all | Collapse all

Membership receipts

  • 1.  Membership receipts

    Posted 16 days ago

    Good afternoon!

     

    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

    University Advancement

    William & Mary

    asfitzgerald@wm.edu

    (o) 757-221-1196

    (c) 757-634-7704

     

    During this unprecedented crisis, please consider offering your support to W&M so that we can meet the most pressing needs of our students, faculty, and staff. 

     

    ForTheBold.wm.edu   |  #WMForTheBold  

     



  • 2.  RE: Membership receipts

    Posted 16 days ago
    There are three questions here, I think:

    1 - Should you issue your QPQ disclosure with the solicitation only, or with the receipt only, or both?
    2 - Where should you track the $65 worth of benefits provided in your database(s)
    3 - What receipt should you issue

    Doing the QPQ disclosure only is a problem for your donors - they will want receipts, and if you issue receipts, you need the receipts to address the QPQ issue. One way to address this is to issue a pledge statement with each payment, showing the membership pledge, the amount paid, and the remaining balance. The pledge statement can include language like 'Annual members receive a total of $65 per year in goods and services as part of their membership.' That resolves 1 and 3, regardless of where the member is in their annual membership cycle. You can be much less fancy too, and have a regular receipt with this disclosure, but the receipted item should indicate it's a monthly installment of an annual membership. You don't need to show all the statement information.

    Remember, you never say whether anything is tax deductible or not. You simply report if you furnished goods and services or not, and your org's status as a nonprofit. The donor has to decide what to claim and what not to claim.

    As for the $65 of benefits and your database, there are two schools of thought (at least!) on this. One school says that so long as the donor gets their receipt, Advancement doesn't really need to see or track this. The business office is tracking the actual expenses associated with providing the benefits. Another school of thought says that Advancement should be tracking non-gift revenues associated with fundraising, since it already does so with in-kind gifts, and it's better to be comprehensive.

    The issue, then, is whether your DB can comfortably support producing the receipts you want to produce. In Raiser's Edge, for example, the 'Receipted Amount' field is typically used to produce the a receipt showing the charitable portion of a QPQ. Alternatively, the gift could be split into two transactions. Both are pretty inelegant solutions for your case. But if you have to go down that road, I would take the non-gift portion out of the first receipt. That's the payment that triggers the grant of benefits. There may be more elegant ways of handling the data on the back end, depending on your DB and general policies here.




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

    Schedule a 30-minute consultation now:






  • 3.  RE: Membership receipts

    Posted 15 days ago

    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!

     

    Thanks again!

     

     






  • 4.  RE: Membership receipts

    Posted 15 days ago
    Aimee, your receipt - to be used for tax purposes - must reflect the deductible amount one way or another.  While I agree with Isaac that the pledge confirmation can (and should) reflect what you might receive, that is not a legal tax document.  Only the receipt is.  If you state on a receipt that the full amount is a gift (deductible), that violates section 6700 & 6701 of the tax code as you are overstating the amount of the deductible contribution.

    Often it can be a challenge if the benefits are provided over time (or payments are made over time).  In those cases, it is best to issue a single cumulative receipt at the end of the tax year.

    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







  • 5.  RE: Membership receipts

    Posted 15 days ago

    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.

     

    Good luck!

     

    Alan

     

    Alan S. Hejnal   

    Data Quality Manager

     

    SNAGHTML5cbfa34

     

    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                                                                                                                                            

     






  • 6.  RE: Membership receipts

    Posted 15 days ago
    Thanks for articulating that so clearly, Alan.

    I want to add that for the donor's tax purposes, the 'receipt' requirements in Pub 1771 require a timely statement with the amount of cash contributed, and a description and GFE of the goods and services. There is no requirement that the receipt then do the math and show the charitable portion. For the donee's QPQ disclosure obligation, you must include a statement that the donor can only deduct the portion of the donation that exceeds the FMV of the value received - but you don't have to do the math and show the charitable portion. The abbreviated language I used is not sufficient for the QPP disclosure purpose as written, and should be expanded if you decide to go in this direction.

    I also wanted to clarify that the document I suggested you send, which I called a pledge statement, is not the same document you would send for someone who only made a pledge. Your specific case has membership benefits extended only after a pledge and first payment was made, and the document I was suggesting would be a receipt of that payment, and additionally a statement of outstanding balance. As everyone else said, a typical pledge statement isn't a receipt, it's a record of a promise to give.



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

    Schedule a 30-minute consultation now: