How Should Gifts Be Counted?

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:

  1. 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.
  2. Stock gifts: Count the value of the stock (average of high and low) as of the date of receipt.
  3. Life insurance: If a charity is given ownership of a life insurance policy, it should count the cash surrender value of the insurance policy.
  4. 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.
  5. 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

Posted in blog.

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