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2020 auction items not fulfilled due to COVID

  • 1.  2020 auction items not fulfilled due to COVID

    Posted 12-13-2021 04:19 PM
    In early 2020 one of our academic departments held an auction for multiple in-person items that have yet to be fulfilled due to COVID (cooking services, catered meals, etc.). They have reached us to about this in (the end of) 2021 and want to offer donors the option of getting a "refund," donating the full portion, or postponing the fulfillment of their auction item until the local COVID restrictions/situation lightens up. With this being from a different tax year, what sort of implications should we be watching for/communicating to donors?

    AMBER R. GICHARD

    Director of Fund & Gift Services

    University of Alaska Foundation

    1815 Bragaw St., Suite 206, Anchorage, AK, 99508

    Voicemail: 907.786.1016

    Join us for Alaska: universityforalaska.com

    Make a gift online: engage.alaska.edu



    ------------------------------
    Amber Gichard
    Director of Fund & Gift Services
    University of Alaska Foundation
    argichard@alaska.edu
    ------------------------------


  • 2.  RE: 2020 auction items not fulfilled due to COVID

    Posted 12-13-2021 04:38 PM
    Obviously, the "refund" will negate the tax-deductibility of their original payment.  You will want to request the return of the original gift receipt and, in writing, explain that under no circumstance may they claim the deduction.

    Further, you will need to refund the payment to the same legal entity (or credit card) that made the original payment.

    If they choose to defer then no one needs to do anything.  The original QPQ receipt is accurate as they "earned" the benefit at the time of the gift - regardless of when, or ever, they exercise the benefit.

    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






  • 3.  RE: 2020 auction items not fulfilled due to COVID

    Posted 12-13-2021 04:52 PM
    I overlooked your third option - donating the full amount.

    Assuming you have issued a QPQ receipt already and the donor "accepted" the benefit, about all they can do now is donate that benefit back to you.  Meaning they can only make a gift in kind.

    However, I have seen others (I have not confirmed this to be appropriate with the IRS) "cancel" the benefit that had been "earned."  By canceling, in writing, you offer the option of receiving a cash payment equal to the value of the benefits or allowing them to direct you to retain the funds belonging to them.  There's a bit of paperwork involved with this scenario.  On the accounting system you somehow have to show the "return" of the benefits portion and then the internal transfer of that payment back to you.

    It's best to get your CFO involved if you wish to pursue this option.

    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







  • 4.  RE: 2020 auction items not fulfilled due to COVID

    Posted 12-13-2021 04:48 PM
    I would be very wary of offering a refund of the gift portion, especially absent any specific policy you have that would cover this type of exception. Generally speaking, donations are non-refundable, since they belong to the public good. 

    You could offer a refund for the non-gift portion only. That would not change the tax status of the gift portion.

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

    Schedule a 30-minute consultation now: