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Bifurcation rules

  • 1.  Bifurcation rules

    Posted 08-31-2022 12:51 PM
    We have had outside counsel advise,  based on the Council of Foundation position, that we can allow DAF, PF,. and IRA QCD donors to make bifurcated payment to cover the FMV of any benefits they wish to receive.  I still take the stance that we cannot based on IRS 73-2017.  What say you, community?

    Side note: they also said we do not have to do a good faith estimate of the FMV of meals and entertainment said donors are receiving at donor events because we also provide educational components.  Advised these are considered incidental benefits akin to taking a donor out to dinner.  Hmmm.

    ------------------------------
    Kristin Richardson
    Executive Director, Development Services
    Colonial Williamsburg Foundation
    krichards1@cwf.org
    ------------------------------


  • 2.  RE: Bifurcation rules

    Posted 08-31-2022 01:03 PM
    It would help if you had new advisors ��.

    These laws have not changed.

    John H. Taylor 
    919.816.5903 (Cell/Text)

    Big Ideas; Small Keyboard





  • 3.  RE: Bifurcation rules

    Posted 08-31-2022 01:30 PM
    Hi Kirstin,

    The Council on Foundations' position (https://cof.org/sites/default/files/documents/files/FINALCommentsDAFNotice2017-73.pdf) is that bifurcation should be allowed in most cases, not that it is allowed. It's not really up to their opinion, in any case. It's the IRS and Dept of Treasury who hold that bifurcation of FMV and charitable amounts provides more than an incidental benefit.

    Fidelity and others have examples of how to do bifurcation in a compliant way. Basically, the donor buys the regular ticket at the regular price that provides all the material benefits that such a ticket provides to any donor. Then the DAF makes an additional gift, for which only incidental benefits, like recognition, are provided to the donor. Even this opinion is controversial, and there was quite a debate about it here a few weeks ago. 

    Your outside counsel might need some outside counsel on this one.


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

    Schedule a 30-minute consultation now:






  • 4.  RE: Bifurcation rules

    Posted 08-31-2022 01:34 PM
    Ditto.  And the comments regarding no quid pro quo are nonsense.

    It is true that if you provide a donor with free admission to a lecture or class that has no entrance fee, there is no QPQ.  In fact, these are great stewardship activities.

    But any benefit that exceeds the token item rule - or has a FMV of greater than 2% of the amount given - is subject to the IRS gift reduction rules.

    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