Getting Ready for January 2021

In a lot of years, January has been hectic for me. Why? Because my phone has rung ceaselessly about year-end gift problems.

What sorts of problems? These have been typical phone calls:

  • Donor wired stock to us in late December, but we didn’t receive the stock until January. Our business office says we keep our December books open until January 23. What should we do?
  • Donor made a credit card gift to us in December, but we didn’t get the money until January 17. What should we do?
  • Donor mailed a check to us that we didn’t get until January. The check is dated December 31. What should we do?

The question in each situation is “What should we do?”. The answer is, issue a correct gift receipt.

The prescription for a correct gift receipt is [a] stick to the known facts and [b] adhere to the tax law.

Here’s the body text of a specimen gift receipt for the donor who mailed a check in late December.

Thank you for your cash gift of $5,000 made by your Chase Bank check number 2651, dated December 31, 2020, which [our charity] received in the mail on January 4, 2021.

[Our charity] provided no goods or services to you in consideration of this gift.

We should examine the reasons for using this text, which we’ll do next time. Meantime, keep this in mind:

What should a gift officer not do? The answer is, don’t give the donor legal advice. Instead recommend that the donor check with his or her own lawyer or other tax advisor.

By Jon Tidd, J.D.
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