Tax receipt or not?

Shanna Chandler

We recently had a donor make a large contribution to our organization for a specific project.  The problem is, when the check arrived, the donor had issued it to the solicitor instead of the organization.  The communications clearly state that the gift was intended for the organization, not the individual but the check is wrong.

The solicitor is a staff member and would like to be out of the middle of this.  We reached out to the donor and asked that they send a new check written out to the organization.  The donor asked that the solicitor just sign it over to the organization and be done.  (background- this is a new donor and likes to move fast) 

We then let them know that we would not be able to issue a tax receipt unless he issued a new check.  (we assumed this) Is that a correct assumption? Should we be concerned about how this might look on our books?  The staff member doesn't want his name associated with the money (understandably).

Could we process the signed over check and receipt the donor?

 Any thoughts would be helpful.

Thank you!

JoAnn Strommen

Shanna Chandler:

We recently had a donor make a large contribution to our organization for a specific project.  The problem is, when the check arrived, the donor had issued it to the solicitor instead of the organization.  The communications clearly state that the gift was intended for the organization, not the individual but the check is wrong.

The solicitor is a staff member and would like to be out of the middle of this.  We reached out to the donor and asked that they send a new check written out to the organization.  The donor asked that the solicitor just sign it over to the organization and be done.  (background- this is a new donor and likes to move fast) 

We then let them know that we would not be able to issue a tax receipt unless he issued a new check.  (we assumed this) Is that a correct assumption? Should we be concerned about how this might look on our books?  The staff member doesn't want his name associated with the money (understandably).

Could we process the signed over check and receipt the donor?

 Any thoughts would be helpful.

Thank you!

Yikes.  Yes, that's my understanding by making the check out to the solicitor, the solicitor has control of the $.  Actually, theirs to donate or not. 

Not sure how large you mean but by accepting the check (endorsing it) I believe they will be accountable for it.  Can understand not wanting to be.

There was another post on very similar situation but I can't find it right now.  Suggestions were to have donor re-issue check.

I suggest you post or search archives at www.fundsvcs.org.  They field fundraising questions and go much broader than RE users.  Someone there most likely knows the legalities where I'm going with what I've heard from others.  The other thing I'd consider is asking your orgs auditor/tax consultant for their opinion.

 

Mary McConne

Shanna Chandler:

We recently had a donor make a large contribution to our organization for a specific project.  The problem is, when the check arrived, the donor had issued it to the solicitor instead of the organization.  The communications clearly state that the gift was intended for the organization, not the individual but the check is wrong.

The solicitor is a staff member and would like to be out of the middle of this.  We reached out to the donor and asked that they send a new check written out to the organization.  The donor asked that the solicitor just sign it over to the organization and be done.  (background- this is a new donor and likes to move fast) 

We then let them know that we would not be able to issue a tax receipt unless he issued a new check.  (we assumed this) Is that a correct assumption? Should we be concerned about how this might look on our books?  The staff member doesn't want his name associated with the money (understandably).

Could we process the signed over check and receipt the donor?

 Any thoughts would be helpful.

Thank you!

Try depositing into your bank. Sometimes they don't notice who the check is made out to. Especially if it is in a group of checks. Then you can thank the donor and issue their tax receipt. Make a note about this on the gift record Worth a try. If the bank won't accept it and you donor won't rewrite check the solicitor can sign it over. As long as the money goes to your organization you should be ok issuing a tax receipt. The money isn't going to the solicitor.

JoAnn Strommen

Mary McConnel:
Try depositing into your bank. Sometimes they don't notice who the check is made out to. Especially if it is in a group of checks. Then you can thank the donor and issue their tax receipt. Make a note about this on the gift record Worth a try. If the bank won't accept it and you donor won't rewrite check the solicitor can sign it over. As long as the money goes to your organization you should be ok issuing a tax receipt. The money isn't going to the solicitor.

I respectfully disagree, Mary. 

Shanna, please check with an expert in this field before accepting the endorsed check.  That staff person may find themself in hot water as they will have unreported income.  Endorsing it shows they own the $ and exercising control over where it is going.  Issuing a receipt to the original check writer could put you in trouble I don't think they legally could be said to have donated the money to you.

Shanna Chandler

JoAnn Strommen:

I respectfully disagree, Mary. 

Shanna, please check with an expert in this field before accepting the endorsed check.  That staff person may find themself in hot water as they will have unreported income.  Endorsing it shows they own the $ and exercising control over where it is going.  Issuing a receipt to the original check writer could put you in trouble I don't think they legally could be said to have donated the money to you.

Thank you JoAnn. We are looking in to things now. Is it $10K so it isn't a small check. I am sure the bank would allow the deposit as long as it was signed over. It is more about how this could impact the solicitor/employee. If it was $100, I wouldn't be too worried. I worried. And based on the communications with the donor, I am not sure he is concerned about getting a tax deduction. I still want to know the legal implications around this. Thanks for the feedback.

Shanna Chandler

Shanna Chandler:
Thank you JoAnn. We are looking in to things now. Is it $10K so it isn't a small check. I am sure the bank would allow the deposit as long as it was signed over. It is more about how this could impact the solicitor/employee. If it was $100, I wouldn't be too worried. I worried. And based on the communications with the donor, I am not sure he is concerned about getting a tax deduction. I still want to know the legal implications around this. Thanks for the feedback.

So to conclude this question.  We consulted with legal council and because we were able to show that the gift was intended for the museum and not the individual, we processed the check once it was signed over and issued a receipt.

JoAnn Strommen

Shanna Chandler:

So to conclude this question.  We consulted with legal council and because we were able to show that the gift was intended for the museum and not the individual, we processed the check once it was signed over and issued a receipt.

I'm glad you got a "legal" answer.  That should help put the employee's mind at ease too and give them answers should they run into questions come tax time.