Vendor Donation

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Hello,

 How does your organization record a donation that is a deduction of their invoice? It's kind of like a payroll gift, but since it's an outside vendor, how do you record/receipt that according to the IRS guidelines?

Thanks in advance!

 

 

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  • JoAnn Strommen
    JoAnn Strommen ✭✭✭✭✭
    Ancient Membership Facilitator 4 Name Dropper Photogenic
    Alison Kim:

    Hello,

     How does your organization record a donation that is a deduction of their invoice? It's kind of like a payroll gift, but since it's an outside vendor, how do you record/receipt that according to the IRS guidelines?

    Thanks in advance!

     

     

    Allison, I recommend you post your question/read archives on fund services website (www.fundsvcs.org).  Their audience is much broader than RE users.  In my mind it's not really like a payroll gift - that is $.

    From my limited experience with this, it can be complicated.  Is the invoice for goods or services?  Goods would be considered a GIK by some orgs and acknowledged with a receipt of "thank you for the donation of 6 pair of socks".  Donation of services are generally not considered tax deductible. 

    If you don't receive/find a post from someone who you feel is an expert on it, I would contact your org's CPA/auditor.  I'm not an IRS expert by any means and I tend to be overly cautious as it's not worth risking an orgs tax status. :) 

  • JoAnn Strommen:

    Allison, I recommend you post your question/read archives on fund services website (www.fundsvcs.org).  Their audience is much broader than RE users.  In my mind it's not really like a payroll gift - that is $.

    From my limited experience with this, it can be complicated.  Is the invoice for goods or services?  Goods would be considered a GIK by some orgs and acknowledged with a receipt of "thank you for the donation of 6 pair of socks".  Donation of services are generally not considered tax deductible. 

    If you don't receive/find a post from someone who you feel is an expert on it, I would contact your org's CPA/auditor.  I'm not an IRS expert by any means and I tend to be overly cautious as it's not worth risking an orgs tax status. :) 

    Since it's a service donation (non tax-deductible), I'm guessing we don't record it? I'll continue my research :) Thank you for your reply JoAnn!
  • JoAnn Strommen:

    Allison, I recommend you post your question/read archives on fund services website (www.fundsvcs.org).  Their audience is much broader than RE users.  In my mind it's not really like a payroll gift - that is $.

    From my limited experience with this, it can be complicated.  Is the invoice for goods or services?  Goods would be considered a GIK by some orgs and acknowledged with a receipt of "thank you for the donation of 6 pair of socks".  Donation of services are generally not considered tax deductible. 

    If you don't receive/find a post from someone who you feel is an expert on it, I would contact your org's CPA/auditor.  I'm not an IRS expert by any means and I tend to be overly cautious as it's not worth risking an orgs tax status. :) 

     Allison - I agree with JoAnn that it can be complicated and does kind of depend on your organization and the type of info they need to capture for the Finance Department vs. the kind of info that Development/Advancement needs to have.  You should talk to your business office and see what they require and/or want/need to see or not (auditor/CPA).

    I have, and a few orgs, been asked to capture the services info.  It's sort of like volunteer hours -- but not.  When I have had to capture it for the development department, I have recorded it as GIK and tagged it so that it did not come up as an actual item in the reporting. When doing this, I have made note of the value of the service, since we have an invoice, but that dollar amount, like with any other GIK, is never published in the acknowledgement letter or receipts.

  • Christine Cooke:

     Allison - I agree with JoAnn that it can be complicated and does kind of depend on your organization and the type of info they need to capture for the Finance Department vs. the kind of info that Development/Advancement needs to have.  You should talk to your business office and see what they require and/or want/need to see or not (auditor/CPA).

    I have, and a few orgs, been asked to capture the services info.  It's sort of like volunteer hours -- but not.  When I have had to capture it for the development department, I have recorded it as GIK and tagged it so that it did not come up as an actual item in the reporting. When doing this, I have made note of the value of the service, since we have an invoice, but that dollar amount, like with any other GIK, is never published in the acknowledgement letter or receipts.

    complicated...

    I think sometimes a person can claim volunteer hours for professional services on their taxes, but that's not our organization's concern. I have had consultants discount services (like design, printing, food) at my current org and at past orgs. 

    For the purposes of keeping a record, we typically enter this as a GIK with $0 and note in the reference the good or services that were received or discounted.  A lot of the time these discounts are linked to an event so we like to keep up with it.  And we do think of them as an in-kind donor.  Similar to the way a media sponsor might be recognized or recorded in RE on the event, but no real dollar amount.

    It is similar to volunteer hours but not, and we don't track volunteers in RE.

    I've also seen orgs do nothing with this in RE at all.

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