Recording gifts of service and other non-tax-deductible gifts in RE

Diane Tiffany

We would like to record non-tax-deductible gifts of service, partial interest, etc in the donor's record in RE. This would show the full scope of the donor's giving, both recorded gifts and other.   Does a gift type of "Other" make sense? Do we want to mingle these with real gift data?  Should this information be somewhere other than in gifts? Does anyone have suggestions on how this can be done?  Thank you!

JoAnn Strommen

Whether you 'mingle' them is a decision for your org.  If you want to look at gift tab and see complete giving history, then entering as a gift is the way to go.  If you want to have to look elsewhere on the record - notes/attributes etc then choose that option. 


I think having all on gift tab makes the most sense. Gift type of 'other' will work if you're not using it for another purpose and seems to be the easiest, cleanest and most straightforward to me.  Just be sure you have talked to your finance about posting gifts (FE or other software) so that they know how they should be handling gifts with gift type of 'other.'


If you're using gift type of 'other' already, you could consider a adding gift sub-type for these gifts so they could be defined separately from the gifts already marked as 'other'.


My 2 cents...

Happy Easter!!

Ryan Hyde

I agree with JoAnn, but I just want to add that gifts of service are added as gift-in-kind in our system.

John Heizer

Gifts of service are still a gift-in-kind from a fundraising perspective (which is what RE is designed to track).  Whether it is tax deductible is between the donor and their tax advisors and I strongly recommend staying out of that relationship by NEVER telling a donor what amount would be deductible, only telling them what amount (if any) of benefits they received from their gift (who knows, maybe there is a provision or loophole in the donor's state income tax law that allows deducting gifts of service).  That said, our Finance department (for whatever reason) tracks gifts of goods and gifts of services separately so we have two different Funds in RE for them.  But from the Development point of view, both count equally toward a donor's giving history (at least in situations where we do count any gifts-in-kind).

Diane Tiffany

Thanks for getting back to me.  I think the mingling is a quesiton we'll have to discuss. John, when you say you have two RE Funds, what do you mean?  Also, I agree that proof of tax deductiblity and value is up to donor and accountant. However, why would I want to record a gift of service knowing it's not a tax deductible gift?  Maybe just record it, but don't receipt it?


Thanks all,

Diane

Jen Claudy

You want to acknowledge and thank donors whenever possible for anything they give you, because that's good stewardship and that person might just turn around and send you a cash donation.  Plus, you can send an appeal to those making GIK (we also count services as GIK) asking for financial support.  And you can (and possibly should) list them in your donor lists...we have just an alpha list of In-Kind Donors, no amounts or levels.  What you track in RE is not really related at all to what you consider to be a tax deductible gift.  As John said, determining tax deductibility should be left to the donor.


You want RE to have the most accurate and detailed picture of each donor/constituent's interactions with your organization because that will shape how you (as the organization) approach and interact with that donor in the future.

Faith Murray

We went through a similar discussion last year and decided that donated goods/services should be included in a donor's gift history. We had a donor who had never given a cash gift, but had thousands of dollars of in-kind donations over the years, and his RE record was blank... so new people didn't know he was a major donor.


Our Finance dept, which uses Financial Edge, does not like in-kind gifts showing up as cash revenue on reports though, so our solution has been: 1) add in-kind gifts but with a dollar value and receipt value of $0; 2) create a Gift Attribute of "Fair Market Value" to record the approximate value of the donated good/service; mark the gift "Do Not Post" under the Misacellaneous tab, so that it does not pull into FE. When we need to pull in-kind gifts for donor recognition lists, we can then pull a Query on in-kind gifts with the Fair Market value of the Gift Attribute, without messing up our financial reports or accidentally including a gift value on automated end-of-year tax receipts.


 

bbnxt sandboxfour

I also use a different fund code for any goods donated or gift in kind services,  I use "other" as type and the specific fund code.  This way when I pull reports, I exclude that fund code and they don't show up in cash received totals, but at the same time you are tracking the donor's true giving history.   I enter "$0.00" for any of these donations.  As mentioned in another post, the value of goods or services donated is up to the donor and tax advisor.

John Heizer

Diane Tiffany:

Thanks for getting back to me.  I think the mingling is a quesiton we'll have to discuss. John, when you say you have two RE Funds, what do you mean?  Also, I agree that proof of tax deductiblity and value is up to donor and accountant. However, why would I want to record a gift of service knowing it's not a tax deductible gift?  Maybe just record it, but don't receipt it?


Thanks all,

Diane

One Fund in RE is "In-Kind Goods" and one is "In-Kind Services" and they are attached to two different GL accounts used by our Finance department.


Why record the Gift if it isn't tax deductible?  Because it's still a Gift by a donor that has value to your organization and to the donor regardless of tax deductiblity.  RE isn't for creating tax returns, it's for tracking your relationship with donors and every Gift is part of that relationship.  If someone gives us $25,000 worth of consulting services on a big project, our organization doesn't care about whether or not the donor can deduct it from their taxes, we are thrilled to get that sizable donation for something that we would have otherwise had to pay for and we want that donor to get full credit for their contribution.  If the donor then gives us an additional $10,000 in cash we want to recognize that donor at a $35,000 giving level (some orgs just list in-kind donors separately).


Note that this is only for in-kind gifts that offset an expense (the gift is booked both as income and a budgeted expense ... something we would have had to otherwise purchase).  Gifts for things such as auction items (which we would not have purchased or budgeted for) are tracked in RE, but "off-books" (a special Campaign that is excluded from financial reporting).  The income from the sale of the auction item is what we track "on-books."


If the Gift isn't either offsetting an expense or providing income from an auction sale then you probably should exclude such a Gift in your Gift Acceptance Policy.