Donations from America

Christina Kotsani

Hello Everyone,


I am writing on behalf of a UK charity regarding donations received in America. For the purposes of tax efficient giving there is a 501 c 3 organization in America (American Friends), to which donors can make their gifts.  All donations are kept into an american bank account and the Board of Directors can approve a grant to the UK charity.

The american bank account is not only used to deposit donations but to pay for the maintenance of the 501 c 3 organization (insurance) and other bank charges. Therefore, the money in the bank account is the result of donations minus expenditure. 


The way we have been recording the gifts from America is: Add the gift amount as a pledge on the American Friends record on the date the donor made the donation to the American Friends and soft credit to the donor. Once the grant is approved and wired into the UK account, we apply the gifts that consist the grant to the pledges. Since the donor is actually the American Friends charity, we can't record the gifts under the actual donors' names, but only soft credit it to the donors so we can query on them . We can't either record the gifts as cash gifts until the grant reaches our UK account and applied to the pledges. 


The problem is that because the bank account in America is used for expenditure the money that reaches the UK is always less that the actual donations received. This cause an outstanding balance on the American Friends record on RE, which is not an actual balance, since all gifts have been received but monies have been spent on maintenance. 


My question is what we could do with these outstanding pledges - we don't want to write them off, as money has actually been received. Of course, this balance creates problems with reporting as well.


Grateful for any thoughts. Thank you.

 

Elizabeth Johnson

Hi Christina Kotsani‍,


Does the American Friends have their own separate database where they log all the donors, donations, and do the receipting/acknowledgement? Do they do their own donor recognition report or annual report or does all that fall under your organization. How separate from you are they really? Do they have their own separate board of directors? Or is there overlap between the directors on both boards if there are two boards? 


Not knowing the answer to that here are some additional things to ponder.


When you receive credit card donations directly in the UK charity do you enter the full amount of the donation or do you subtract the fees?

I would encourage erring on the side of being consistent about how an organization enters gifts. How are the fees involved in the American Friends any different than credit card fees? There is always a certain cost of doing business. If I would enter the full amount for the credit card donation I would be inclined to add the full amount for these other donations and vice versa. 


I'm curious how others will reply.


Best,

Elizabeth

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Christina Kotsani

Dear Elizabeth


Thank you so much for taking the time to respond to my question. Please see below some clarification on the issues you raised.

We use the same database for the American Friends gifts, as most of those donors are alumni of ours or past parents. These donors are acknowledged differently and the annual reporting / taxation is done according to the American regulations (our American Friends is a 501 (c) (3) ). The American Friends have their own Board, through which grants to the UK organisation are approved. When receiving credit card donations, the amount recorded in our database is always in pounds and is the full amount taking into consideration the exchange rate. We are being consistent with how we record credit card donations, making sure the full amount is recorded and not the one after fees. 


Many thanks again for your kindness to respond. 


Best wishes

Christina