Incoming funds that are 100% NOT tax-deductible

If it's truly a 'gift', we record them on donor record with any needed notations.  We issue a receipt/thank you letter with $ amount but no tax deduction verbage. 



If it's something like a payment for grandchildren's Y programs, we do not enter it in RE.  It doesn't qualify as a gift yet alone tax deduction.

Whether you are talking about payment for services or a program, registration fees for an event for which there is no FMV (fair market value), a donation for which the FMV of the benefits is greater than the amount of the gift, or a gift thru a foundation or a fund for which the donor already received a tax deduction, I have entered it all in RE at some point or another.



Our basic acknowledgement letters have the following language: "No goods or services were provided in exchange for this gift. This gift is tax-deductible to the extent allowed by law. Please consult your tax professional on the deductibility of your charitable gifts."  This pretty much covers you. 



Much of the time, our staff remove this line from gifts via a Foundation or a Fund, but even if it slips thru, most of those folks are already aware that they can't deduct it twice, or they have someone who does their taxes who knows.  And the name of the foundation or fund is on the letter as part of the address.



For registration fees for which we know there is no part of the gift that is deductible, we will usually have a different acknowledgement letter, and it will not have the tax statement on it at all.



If you are providing benefits, state the FMV of benefits received by changing the text to, "The fair market value of goods or services received is $x. This gift is tax-deductible to the extent allowed by law. Please consult your tax professional on the deductibility of your charitable gifts."  I have had co-workers suggest that our letters say something along the lines of, "the amount of your gift that is tax-deductible is..." but I argue against this because seems to put the decision in your hands rather than the donor's, and it means you must review and edit your letters much more often...and who knows if there's some other reason you can't possibly know of based on what you have (the check) that makes it not deductible.  Better to state what you are required to state (the FMV of goods or services, and the date & amt of the gift) and use the rest of your time/space to express your gratitude for the gift.  You aren't required by law to acknowledge or receipt a gift at all unless it is more than $75...or maybe $250, I don't remember which, because we acknowledge everything.)



And I re-read your post...as far as simply recording in RE, we record all sorts of things that aren't tax-deductible.  If we are recording something not deductible but still sending an acknowledgement letter, then I would probably use a separate Letter Code and either include a Reference Note or Gift Note to indicate what the deal is, if needed.  There is a [Benefits] button on the Gift Record that might be of use to you if you need to track what was given in return that makes it not deductible.

We enter ALL money into RE.  This shows how "involved" any one person or organization is involved with us. 



We have the following funds:

Program Fees (not tax ded)

Membership Dues (Tax ded as allowed by law)

Donations (Tax Ded as allowed by law)

General Revenue - no donation

General Revenue - Donation (tax ded as allowed by law)



We enter all money that is received through RE, and since we are integrated with FE, this is CRITICAL.

Yes someone may NEVER give a donation, but if they are paying for attending our many events, we want to KNOW that, because for us that is supporting what we do even-though it's technically not a donation.



Also, the funds listed above are a much simplified version of the funds we use, as our structure is more intricate.  If anyone has additional questions when it comes to deferred revenue vs current revenue and how we are handling that particular "fun" feel free to ask.

 

Three items come to mind: Raffles, Mulligans, Auction Purchases.

All three of these are 100% non tax-deductible - but for a former employer they represented a large portion of event revenue.

And in the case of the Golf Outing - recording the Raffle tickets and Mulligan purchases gave us the opportunity to capture Home addresses and contact information for golfers who were guests of a corporate sponsor.  Frequently those golfers would then become donors for the school scholarship fund.  We wouldn't have been able to contact them if we didn't record the Raffle and Mulligan purchases. 

I used a separate appeal for Raffle and Mulligan, nested within the Campaign for the Golf Outing for that year.  I could then run financial reports from RE that reflected the total revenue for the event - but I could also exclude the Raffle and Mulligan appeals when needed.  

 

We enter all money received by the foundation into RE and we have all kinds of revenue that comes in that is not charitable so this is how we work it.  We have a gift attribute on all gifts showing if it is charitable or not charitable. If the benefits or FMV is less than the gift then we split the gift into 2 lines, one for the charitable portion and one for the benefits.  We also use the receipt amount box on the gift to show the correct amount. This allows us to pull reports on true charitable giving per person.  On our letters, we have a statement on almost all of them that reads either "IRS Note:  No benefits were provided in consideration for this gift" or "IRS Note: Benefits were provided in consideration for this gift and $XXX (or no portion) qualifies for the charitable deduction".  We have thought about changing the benefit line to "Benefits with a value of $XXX has been provided in consideration for this gift" but a decision is still pending for that.  I use an If/Then statement in the letters based on the receipt amount on which line to choose so it does not have to be manually changed all the time.  We think this works really well and allows us to really choose what goes into the reports we pull.

 

There are all sorts of monies or "gifts" that are entered into RE depending on your organization and the benefit(s) of having that info in RE so that you see an overall picture of constituent activity.

In my experience, the event manger usually calculate a FMV for event related items, such as tickets and sponsorships and that is entered on the gift in the Receipt Amount field, whereas the full ticket or sponsorship amount is in the Gift Amount field.  Sometimes there is no receipt amount because the ticket price is lower or equal to the cost of the ticket.



For other non-tax deductible items that you wish to record, I suggest having separate Funds for those things that are coded for what they are (what bucket they go in) AND also include a code for indicating that it is a Pass-Through, so that it is clear to all that if you pull a general report and do not filter Funds, you can see which things should not count towards your goals or income.  I have just preceded the Fund code with a pt-:  example  pt-ParentClub.



It makes it very clear to Development and to Finance that we are not counting this as income in Development, just recording the activity.

I've worked for a few charities that process transactions like these. For example, at an auction, if a buyer pays more than the value of a prize, the difference is tax deductible. Therefore on that person's receipt I record the value that is a purchase and the value that is a donation. I also include a short Post Script explaining what is what, for instance:



PS - The prize is valued at ___, making the difference ___ tax deductible. 



Then of course the individual also has contact details for a rep at the office should questions arise. 



As you know, we can't control how someone reports their taxes but we can be explicitly clear with our receipting.

This is the very reason we do not use split gifts.  If I receive a gift for multiple pledges, I split the gift into different gifts so the pledge/campaign/appeal can all be accounted for accurately.  This will create multiple receipts for the one gifts, but the total of all should match.


I would like to create a Combined Ack/Receipt that will list multiple gifts on one page so I can combine all receipts into one letter but have not had the time to figure it out yet.


Candy