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Question about insubstantial benefits

  • 1.  Question about insubstantial benefits

    Posted 12 days ago

    Good morning, all –

     

    If we give away low-cost items (e.g. facemasks with our school's logo) in response to gifts, and the gift is LESS THAN $56.50, what is the maximum value the goods can be before we need to disclose their fair market value on the receipts? 

     

    I believe it's 2% of the value of the gift, but I just wanted to check to see if there are any other exceptions to this rule. 

     

    Thanks,

     

    Michael Halverson, Ed.D.
    Senior Director of Advancement Services
    Loyola University Chicago
    T.
    312-915-7283 | C. 320-363-4987
    mhalverson@luc.edu | www.luc.edu/advancement

     

    150_email_150_31

     



  • 2.  RE: Question about insubstantial benefits

    Posted 12 days ago
    If you give things away below the minimum gift requirement, you are subject to the 2% rule.  So all these lovely items must be disclosed unless their value is under $1.12 or so.

    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: Question about insubstantial benefits

    Posted 12 days ago

    That's what I thought; thanks so much!

     

    Michael Halverson, Ed.D.
    Senior Director of Advancement Services
    Loyola University Chicago
    T. 312-915-7283 | C.
    320-363-4987
    mhalverson@luc.edu | www.luc.edu/advancement

     

     






  • 4.  RE: Question about insubstantial benefits

    Posted 11 days ago
    If the gift was over $56.50 would it still need to be disclosed?  If the situation would be a gift more than $56.50 and they gave away the low cost item would it then be considered a "token item" because it is so minimal?   

    While we are on the subject, can you tell me again how do I know which option to use when we give away low cost items.    IRS gives us an option of 1) low cost articles whose FMV is not more than 2% of the donor's payment or $113.00 whichever is less OR 2) When the payment is $56.50 and the only benefit received is a token item such as a mug, calendar, etc. bearing the organization's name or log.  These token items are deemed to be low cost articles if their cost not FMV does not exceed $11.30, in all aggregate, for all items received by the donor during that year.  

    I am sure you have answered this many times, but since we are on the topic a quick refresher of when I would use each one of these situations would be helpful.

    Thank you.

    ------------------------------
    Corie Pryor
    Coordinator of Advancement Services
    Truman State University
    cpryor@truman.edu
    ------------------------------



  • 5.  RE: Question about insubstantial benefits

    Posted 11 days ago
    Corie, as long as the benefit meets the criteria you reference as a token item (option 2), then that is the rule you follow.

    If the token items value (cumulative value) exceed the annual maximum limit ($11.30 in 2021) - or the donation amount falls below the annual minimum gift ($56.50 in 2021) - then the 2% or $113 (whichever is less) rule applies.

    John

    John H. Taylor 
    919.816.5903 (Cell/Text)

    Big Ideas; Small Keyboard





  • 6.  RE: Question about insubstantial benefits

    Posted 11 days ago
    Hi All,

    Do you know of any private schools that have a separate foundation? What are the advantages and disadvantages? 

    Thank you,

    Olga






  • 7.  RE: Question about insubstantial benefits

    Posted 11 days ago
    Corie, I realize my reply dealt with your second question only.

    Regarding the disclosure if the gift is $56.50+:  Maybe yes, maybe no!  Again, the token benefits must fall within the parameters established by the IRS.  Provided the combined value of all low-cost articles falls under $11.30, and each item reflects the organization name or logo, you do not need to disclose anything.  In such cases I like using the following language on the gift receipt:  No substantial donor benefits or services were provided in exchange for this contribution.

    The italics are for emphasis and do not need to be on the receipt.

    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


    On Thu, Jan 14, 2021 at 8:38 AM John Taylor <johntaylorconsulting@gmail.com> wrote:
    Corie, as long as the benefit meets the criteria you reference as a token item (option 2), then that is the rule you follow.

    If the token items value (cumulative value) exceed the annual maximum limit ($11.30 in 2021) - or the donation amount falls below the annual minimum gift ($56.50 in 2021) - then the 2% or $113 (whichever is less) rule applies.

    John

    John H. Taylor 
    919.816.5903 (Cell/Text)

    Big Ideas; Small Keyboard