What Are the Most Common Problems in Gift Planning? Part IV | Sharpe Group
Posted November 13th, 2019

What Are the Most Common Problems in Gift Planning? Part IV

Last time, we looked at credit card gifts and some of the problems with these gifts…including the credit card fee.

We left off with an equation for figuring the amount Doris should charge to her credit card so that after the 2.5% credit card fee, the charity winds up with $10,000:

X – .025X = $10,000

Solving for X is easy. Combine the terms on the left-hand side of the equation: X – .025X = .975X. This means .975X = $10,000. Which leads to: X = $10,000/.975 = $10,256 (to the nearest whole dollar).

If it were up to me, I’d make this approach part of my organization’s gift acceptance policy.

It’s not clear, by the way, how much Doris gets to claim as a charitable contribution. Can she claim $10,256 (the amount with which she parts) or $10,000 (the amount the done organization receives)? The tax law doesn’t say. The amount she should claim is the call of her accountant or other tax return preparer. If I were in Doris’s shoes, I’d claim $10,256, on the grounds the tax law is unclear.

So much for credit card gifts.

What are some other tricky gifts?

Answer: Any gift can be tricky. You would come to this conclusion if you were in my shoes.

Actual case: Donor mails a $20,000 check to Charity to set up a gift annuity. Charity’s bank presents the check to Donor’s bank for payment. The check is returned…NSF. Charity’s bank again presents the check for payment.  Again the check is returned…still NSF. Donor gets wind of this and transfers plenty of money to his checking account. Too late, too bad. Charity’s bank will not present the check for payment a third time. Donor’s intended gift fails.

Lesson learned: Gift planners should beware!

by Jon Tidd, Esq

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