Gifts postmarked 12/17, but received in 2018 don't count for 2017?

Deb Greenberg · January 2018

In the past, we went by the IRS guideline that anything postmarked as of 12/31/17 counted for 2017 and we entered all gifts as cash gifts. But we have a new Finance VP who is insisting that any gift received at the the end of December, but not deposited until Jan cannot count as 2017 revenue without a receivable, in other words, a pledge, recorded in 2017.

Has anyone encountered this? Is this legit? And how would you handle this requirement without double entry - 1 for the pledge and 1 for the pay-cash?

deb

JoAnn Strommen · January 2018

Per my experience your Finance VP is incorrect from the donor perspective.

First, for the donor all you need to do is receipt the gift as received. No detail of received in 2017/2018 is required at all. A lot of orgs just use a 'gift processed' date. We don't put any date other than the date we write/send the receipt letter. Second, postmarks are only going to be valuable if it is a post office postmark. Metered mail dates are not legally binding.

What year the donor takes any allowable tax deduction is totally their choice. We just deposit gifts received in the new year and issue our receipt as usual. No need for a pledge.

For your organizational accounting, if that is your org's policy for counting funds your VP may be correct. If your org has to deposit the money or have a receivable on record that could be your policy. What year fund you use/account for revenue is totally unrelated to the donor.

Sounds like a policy your finance office will need to revisit and decide on.

shani traum · January 2018

We use 2017 for the gift date (so the donor gets credited in the correct year) and 2018 for the GL post date (for the finance end of things, since that's when the $$ actually hit the bank.)

We don't do anything funky with pledges the way you are describing.

Joanne Felci 2 · January 2018

shani traum:

We use 2017 for the gift date (so the donor gets credited in the correct year) and 2018 for the GL post date (for the finance end of things, since that's when the $$ actually hit the bank.)

We don't do anything funky with pledges the way you are describing.

This is exactly how we handle it Shani

Barbara Schlichter · January 2018

Joanne Felci:

shani traum:

We use 2017 for the gift date (so the donor gets credited in the correct year) and 2018 for the GL post date (for the finance end of things, since that's when the $$ actually hit the bank.)

We don't do anything funky with pledges the way you are describing.

This is exactly how we handle it Shani

Ditto to Shani's reply

shani traum · January 2018

Thanks Joanne,

It’s always reassuring to hear that we’re not
the only ones doing something a certain way!!

Shani Traum

Database and Reporting Manager

Development Office

Hebrew SeniorLife

1200 Centre Street

Boston, MA 02131

617-971-5787

traum@hsl.harvard.edu

www.hebrewseniorlife.org

https://give.hebrewseniorlife.org/giving

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Madeleine Holdsworth · January 2018

Deb Greenberg:

In the past, we went by the IRS guideline that anything postmarked as of 12/31/17 counted for 2017 and we entered all gifts as cash gifts. But we have a new Finance VP who is insisting that any gift received at the the end of December, but not deposited until Jan cannot count as 2017 revenue without a receivable, in other words, a pledge, recorded in 2017.

Has anyone encountered this? Is this legit? And how would you handle this requirement without double entry - 1 for the pledge and 1 for the pay-cash?

deb

Have to agree with everyone else on this one. You can definitely enter those as December 2017 gifts. Our Finance department does give us a "cutoff date" for year end (this year it was Jan 9). The Finance VP needs to look at the IRS PUblication 526, Section "Time of making contribution" which clearly states, "

Checks.

A check you mail to a charity is considered delivered on the date you mail it. " Note it says the date you mail it, not the postmark date. Credit card gifts are another story and definitely have to be dated as of the transaction date.

Alberta Accounting Assistant · January 2018

Deb Greenberg:

In the past, we went by the IRS guideline that anything postmarked as of 12/31/17 counted for 2017 and we entered all gifts as cash gifts. But we have a new Finance VP who is insisting that any gift received at the the end of December, but not deposited until Jan cannot count as 2017 revenue without a receivable, in other words, a pledge, recorded in 2017.

Has anyone encountered this? Is this legit? And how would you handle this requirement without double entry - 1 for the pledge and 1 for the pay-cash?

deb

We review the post mark on our envelopes and keep the envelopes to prove when they were given to our post office; The envelopes get stapled to the back of our forms for easier tracking. So if the post mark says 2017 then we will provide a 2017 tax receipt but its a 2018 post mark then its a 2018 receipt. For the data entry we mark both the gift date and post date as Dec 31, 2017. However in our financial edge system we alter the descrition to 2017 deposited in 2018, this helps keep track of when the deposit went to the bank for bank recs. etc...

Heather MacKenzie · March 2018

Deb Greenberg:

In the past, we went by the IRS guideline that anything postmarked as of 12/31/17 counted for 2017 and we entered all gifts as cash gifts. But we have a new Finance VP who is insisting that any gift received at the the end of December, but not deposited until Jan cannot count as 2017 revenue without a receivable, in other words, a pledge, recorded in 2017.

Has anyone encountered this? Is this legit? And how would you handle this requirement without double entry - 1 for the pledge and 1 for the pay-cash?

deb

I could see this as being an internal way to handle it if your Accounting office uses the accrual accounting method rather than cash accounting. BUT, I agree with everyone else, you certainly can, meeting certain guidelines, count this as 2017 revenue.

Chris Krueger · March 2018

My company does the same as most - if donor check & postmark on the envelope are by Decmeber 31st, it is a gift date of 12/31 for the donor's receipt. It is the donor intent that the gift was for that tax year. When it gets tricky is when the envelope does not have a postmark. There is a fine line of donor intent at that point. But as mentioned below, it is the donors decision of what they report on taxes.

Sarah Ellison · March 2018

Our Finance Department has a similar policy to what your finance director is saying. The Development Department has the policy most people here are describing, trying to align with IRS guidelines to make things as simple as possible for donors. We have a standing agreement to disagree on the dates for those gifts, and when we send the documentation over to Finance for anything postmarked a different year from when it was deposited we include a note that for Development purposes this is a 12/31/20XX gift, but that it was deposited on Y date. My understanding is that Finance tracks those gifts as reconciling items. But that was something that was negotiated between Development and Finance years ago, with the understanding that BOTH departments have external regulations and best practices they are trying to adhere to, and in this specific case they just don't line up.

Colette Broestler · March 2018

While each organization will have their own stipulations regarding donor intent; you are to go by the date on the check, secondarily the post mark. Proper protocol would be to input it for 2017 if the post mark and check date are in 2017.

JoAnn Strommen · March 2018

As you said, each organization will have their own stipulations, but in my opinion the date on the check has next to no meaning. Don't you receive or have you ever written the past year on a check? I'm not a lawyer, but don't think the check date carries much legal weight at all. Every year we have a few checks with the wrong year or no year or date. We also have people who give to our December mail appeal with intent that the money is for upcoming year.

IMO the organization decides what year's fund/accounting the money hits and the donor decides when/if they are claiming a deduction.

Gracie Schild · April 2018

I'm with JoAnn on this. At my last org, our gift date was the date it landed in our posession, either through the mail or online (no matter when the check was deposited or the online donation posted to our account). The ONLY exception to the rule was the December 31/January 1 situation. We checked only one thing - the postmark. If it was in December, we'd credit it to December 31 even though we got it in January. If the postmark was the first business day of the new year, we'd give the donor the benefit of the doubt and also credit it to December 31 (provided they had dated the check in December, of course). Perhaps they dropped it in the mail after the last pick up on the last business day of the year. Any postmark after the first business day of the new year was treated like any other gift, with the day it arrived in the office used as the Gift Date. I can remember one or two exceptions for really unusual situations, but it was really good to have a policy that we could quote to donors who wanted us to fudge the rules without any special circumstances. Sorry, folks!

RE is all about stewardship and the finance/accounting office will post things according to their rules. As long as the intersection is understood, there's no reason why they have to be in exact sync. Before the foundation I worked for was set up and accepting gifts, all the donations were posted to FE by the college's Finance Office. We always worked these things out together and as far as I know there was never any problem with the auditors or anyone else.

Gracie Schild

Bluebird Business Services

Santa Fe NM

Colette Broestler · April 2018

Absolutely. I fully agree, and should have explained further.

No doubt there are individuals that would write an 'untruthful' date on the check. This is where it becomes the employees professional accountability to discern this, and dependant upon that institutions legal teams terms move forward accordingly.

Additionally, If one recieves a check without a date I would recommend going by the post date unless they wish to contact the contstituent (as that is the only official date available). Other situations you describe, such as the same constiutents often giving in December for the following year (we also have this issue) might call for contacting the constituent (will also build your relationship with your constiutents) but is also just one example of why RE/blackbaud is such a wonderful tool. You can use Notes or other tools to let other users know that this is a trend for this individual; and better yet include in the Notes what the final decision/wishes are via contacting the constiuent or referencing your legal terms.

Ryan Hyde · April 2018

The IRS does have rules about this.

Site: https://www.irs.gov/newsroom/tips-from-irs-for-year-end-gifts-to-charity-1

Here's the part that matters:

Year-end gifts. Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of 2015 count for 2015, even if the credit card bill isn’t paid until 2016. Also, checks count for 2015 as long as they are mailed in 2015.

So according to this guideline, you use the postmark date on the envelope to determine which year the gift is attributable to. That's what I use as the gift date in early January when you're dealing with crossover. The GL post date remains the date that the check was deposited, but there's no reason that the GL post date and the gift date need to match (though throughout the rest of the year they do match as it just doesn't make any difference and is easier to make default dates in batch).

Edit: Sorry, didn't read all the other posts - this has been pointed out already. Still getting used to the new sort order in this forum :P

Colette Broestler · April 2018

That is correct Ryan. However I believe they may be looking for answers for when these stipulations aren't as black and white as referenced.

Ex.: the check is mailed in 2015 but the check says 2016 or the check date is 2015 but the post mark is 2016 (in this case, what you referenced might not apply to the database input, but rather the financial dept.). Otherwise your constiuents giving profile could be 'off'.

Ryan Hyde · April 2018

Right, but since the IRS guidelines don't mention this scenario, my instinct is to simply do what the IRS suggests and use only the postmark date. Check dates aren't binding. If a donor calls to question the receipt given, I would just refer them to the IRS guidelines and tell them to consult their tax adviser.

In my five years of doing this, I've had one such call, so I have a feeling we're debating edge cases here.

Karen Hartt · April 2018

Deb Greenberg:

In the past, we went by the IRS guideline that anything postmarked as of 12/31/17 counted for 2017 and we entered all gifts as cash gifts. But we have a new Finance VP who is insisting that any gift received at the the end of December, but not deposited until Jan cannot count as 2017 revenue without a receivable, in other words, a pledge, recorded in 2017.

Has anyone encountered this? Is this legit? And how would you handle this requirement without double entry - 1 for the pledge and 1 for the pay-cash?

deb

Hi Deb,

Like others, we use the postmarked date for gifts at the end of the year. If the postmark is in December it is a gift in that year, if the postmark is in January it is a new year gift. We don't do receivibles as we never know who is sending gifts at year end.

Gifts postmarked 12/17, but received in 2018 don't count for 2017?

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