I get this question a lot.
The answer isn’t provided by tax law, because the tax law is unconcerned about gift counting.
Nonetheless, the tax law applies to the date of gift, for example. As a result, a counting decision in some situations — say, when to count a year-end gift — may wind up being based on the tax law. May.
Let’s take a different tack. Every charity should have a written gift counting policy that has been approved by the Board. Such a policy is needed for a capital campaign, of course. Such a policy also may be needed to measure a fundraiser’s performance.
Lots of big-league charities, however, either have no gift counting policy or have a woefully inadequate gift counting policy.
Given this fact, here are my general prescriptions for gift counting in certain situations in which the charity receives something currently:
- Cash gifts: Count the amount of cash received as of the date of receipt. Easy, except in the case of credit card gifts, which we’ve discussed.
- Stock gifts: Count the value of the stock (average of high and low) as of the date of receipt.
- Life insurance: If a charity is given ownership of a life insurance policy, it should count the cash surrender value of the insurance policy.
- Gift annuities: I’d count the charitable contribution amount as calculated by the charity’s software. It’s not necessarily the best way to count, but it’s simple and precise.
- Something the charity is going to sell as soon as possible: Something such as a small collection of figurines. I’d count the sale price.
These prescriptions are not based on law, just on common sense.
More next time.
by Jon Tidd, Esq