Acknowledging payment for an Auction item from an individual AND their Foundation

David Janeski

To keep me amused our Auction Patrons like to pay for one auction lot from multiple sources.

I need to know how that should look on the acknowledgement letters each paying party receives.

Let’s start with an example and then you can help me with how the acknowledgement letters should look.

 

David Janeski bid on Lot-100 for $5,000  (valued at $4000) and did a Paddle Raise for $1,000.

I know if he paid for this all himself his acknowledgement letter would look like this:



Lot Purchase(s):                                   Purchase Price              Fair Market Value          Deductible Amount

LA-100: A trip to Pirate Island               $5,000                               $4,000                                      $1,000

Donations:

Paddle donation for the arts                $1,000                                $0                                             $1,000

                                                                                                          Total Deductible Amount: $2,000

 

For our example let’s say the Janeski Family Fund paid $3,000 and David Janeski paid $3,000.

How should each acknowledgement letter look then? I've heard that a Foundation can only payon the deductible amount, but I don't know how the acknowledgement numbers would look. Thanks for your help.

Jen Claudy

First, I would never list something as a "deductible amount" because that could be considered as your organization providing tax advise (which you never, ever, ever, ever want to do!).  My policy, which mirrors what I've most often seen in the Community and from other orgs, is to state the Amount Received and the Fair Market Value, and leave the math up to the donor.  At the very least, put "Deductible Amount*" and footnote it with a disclaimer that "* This amount is tax-deductible to the extent allowed by law. Please consult your tax professional on the deductibility of your charitable gifts."



That's if you're sending one letter to one person; in your example, the letter would go to David Janeski and would list the amount received from David Janeski and the amount received from the Janeski Family Fund.  If there are two (or more!) letters, say from David Janeski and the ABC Corporation (David's company, but a separate entity, requiring a separate letter), then I would contact David and ask which payment is for what part of the total amount.



If you have a lot of these, then I would put a statement on the paperwork sent back with the payment, asking the donor, if paying from multiple sources, to specify what is covering what.  And for this time, since it's probably too late to do that, I would apply the payments however it seems to make sense, and then add a statement at the bottom indicating that if the donor needs it distributed differently, to please contact the organization.  Then reissue, with the new alignment, and a very clear indicator with a date at the top that this is a reissued receipt.