Hi,I am looking for some information on what other independent schools and/or colleges with benefit events are doing in regards to receipting donors for sponsorships and tickets for events. While I know it is standard practice to deduct the FMV or cost per head from the donation and the balance of that is tax deductible, we are wondering if places are using the full FMV, which is the entire cost of the event divided by the number of people, or if they are just using the catering cost as the price per head?Also if anyone has any samples of receipts or letters with deduction language, I would love to see some updated examples. Thank you!
Probably the main point that I would add to the helpful discussions by John and Isaac is that, while our viewpoint naturally defaults to that of our organization as putting on the event, the IRS looks at this the other way around, from the point of view of the taxpayer: what did the taxpayer contribute and what would the taxpayer have had to pay for whatever it was that they received in return.
That means that our cost is mostly irrelevant: the value of what the taxpayer received doesn't change whether we got it all for free or whether we badly overpaid for it.
It also means that we're talking about retail cost: what would the taxpayer have had to pay for a similar dinner for two, inclusive, in a comparable venue with similar amenities. The individual donor wouldn't be contracting for a dinner for 200, so the FMV isn't twice the per-person price when buying a dinner for 200, it would be the price for two people when buying a dinner for two. (The same point applies to, say, giving a donor a polo shirt, where the FMV is the retail price, not the price we would get buying shirts in bulk.)
My US$0.02 worth; the usual disclaimers apply.
Alan S. Hejnal
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Smithsonian Institution - Office of Advancement
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Thank you all for this information. Very helpful!
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