Coupons, Vouchers and Gift Certificates... How do you process them?

Tom Klimchak

Hi... We recently had this discussion in our office and I'm curious where you all stand on it. How would you (and WOULD you?) process these three types of items donated to your organization:

Coupons: Require spending money at a certain store to get a discount.
Example: Save $1 when you buy an ice cream sundae.

 
Vouchers: Usually good for a very specific product or service. 
Example: Good for one free ice cream sundae.

 
Gift Certificates: Can be treated like “cash” at a certain store, usually for a set amount.
Example: Good for $5.00 at the Ice Cream Shoppe.



I couldn't find much documentation online about this problem, but if any of you can find an IRS rules and/or regulations I'd be happy to see them!

JoAnn Strommen

if we entered them, we would enter them as GIK.  Generally with $0 value and notations that state specifics like you posted.  Any correspondence with donor would just state thank you for your donation of  .....   May have statement to 'consult your tax advisor regarding any deduction'.  We haven't entered coupons but we have recorded gift certificates.


They may or may not be able to take tax deductions for these type of things. Services are not tax deductible. Generally vouchers/certificates are not at face value for sure as they are not costing the donor that amount.   Per IRS the law limits donor's chariable deduction to the donor's tax baseis in the contributed property and does not permit the donor to claim a fair market value charitable deduction.  (from the IRS info on charity auction items.)  What they do or don't do is up to them and their tax advisors. 


How you record value internally is sort of up to you.  IMO, it's the acknowledgement that needs to just state what was received, no value.


My 2 cent gift certificate....

Tom Klimchak

Yeah, our receipts never list a value, only a description of the gift.


We recently decided to only enter Gift Certificates with a set value, but we're still debating whether or not to enter the coupons and vouchers for a $0 value or not.  I'm not a big fan of $0 gift entries, but I would also like to record that some of these vendors are at least trying to engage and support us....


Thanks!

JoAnn Strommen

Right there with you on entering $0 for GIK but for us recording the orgs support/involvement I/we feel is important in the big picture. 

Christine Cooke 2

Tom Klimchak:
Hi... We recently had this discussion in our office and I'm curious where you all stand on it. How would you (and WOULD you?) process these three types of items donated to your organization:

Coupons: Require spending money at a certain store to get a discount.
Example: Save $1 when you buy an ice cream sundae.

 
Vouchers: Usually good for a very specific product or service. 
Example: Good for one free ice cream sundae.

 
Gift Certificates: Can be treated like “cash” at a certain store, usually for a set amount.
Example: Good for $5.00 at the Ice Cream Shoppe.



I couldn't find much documentation online about this problem, but if any of you can find an IRS rules and/or regulations I'd be happy to see them!

When entered is usually related to an event auction or prize giveaway at an event, or the like.  Entered as Gift-in-Kind with the FMV entered and/or the value of the discount. 

ShawnAlis Cusato

JoAnn Strommen:

if we entered them, we would enter them as GIK.  Generally with $0 value and notations that state specifics like you posted. 


 

I'm curious about the $0 value.  Do you mean the gift amount is $0 or the receipt amount?  I've entered such gifts with the value stated by the donor and the receipt amount of $0. (The acknowledgement doesn't state a value, of course.)  Is there a hard and fast rule about this or is it up to each organization to decide?  If the latter, why did you decide on $0?  Wouldn't it be useful to report on how much GIK you received?  

JoAnn Strommen

Not to say that it might not happen but I've never been asked for a report on the $ of GIK. I use the reference field to document values/details.  As to gift amount vs. receipt amount field, that's probably more of a procedure set by each org.  The only time the fields contain different values for us is then benefits are received and reflected in lesser receipt amount. Finance office also gets GIK info but I think the only time it would be reflected in reports would be quite sizeable GIK donations to perhaps a capital campaign.


Values for gift cards/gift certificates/coupons are a bit arbitrary also.  The value to the business providing to their own business, is usually 50% of face value. So if I'm entering them with a value, it would only be that amount.


If we are talking about the donation of goods, I will put $ amount if there is some documention that is accurate (receipt for programs items purchased for us, etc.). For used items I find most people tend to over-value items.  Garage sale/yard sale value prices are considered FMV. Our donation form that staff are to complete when they receive a GIK states that we will receipt describing the items/merchandise received but will not include an estimated value in the receipt.

ShawnAlis Cusato

Good to know, thanks.

Karen Stuhlfeier

We enter things like this as gifts in kind and simply put a description of what was donated in the acknowledgement letter - like thank you for the 100 coupons. We never put a value. It's up to the donor to determine how they wish to deal with this on their taxes. Our finance department and auditors don't care about the value of these unless someone donates something to us like property.