Receipting individuals for collected funds

Rob Crenshaw · July 2015

At our food bank, one of our main sources of revenue are fund drives in which multiple donors contribute cash and/or checks that are often collected by a fund coordinator who is not associated with our organization, but is usually a volunteer or company sponsoring the drive. Often, the sponsoring company will simply deposit all the raised money themselves and then send us a check with the total amount raised. Inevitably, we get requests from individuals and/or other contributing businesses asking for a tax receipt for their portion of the collected funds. We have been relatively lenient and issued the receipts if the coordinator can provide us with donor info and broken-out amounts, but this makes me nervous as we (the organizational we) cannot substantiate these gifts with legal documentation.

Does anyone have any best practices or advice around this? We obviously want to honor and steward the individuals who participated, but I'm also aware that our auditors would probably swallow their tongues if they knew this was happening. Who has the legal responsibility to receipt these folks, if anyone? Or does the onus fall on the coordinating person/company?

JoAnn Strommen · July 2015

They might do more than swallow their tongues! And to me, you're right to be nervous.

My understanding is that in this situation the person giving you the cash/gift is the donor, unless you have some type of an established agreement with them to serve as your agent. Not sure what all that entails. (You may find more on this topic at www.fundsvcs.org - fundraising questions/forum with broader audience that RE users. But there have been some posts on this topic on BB pages too - but probably not accessible now). The person / company who collected the money has the control over that money regardless of what the intentions may be of the persons giving them the $. A receipt comes from the person/business one gives the money to. Which in this case most likely negates it being a charitable deduction. To get a receipt, check would need to be made out to our org.

That's my experience with this one. Have dealt with it for cash memorial gifts turned in by family.

Susan Leslie · July 2015

We have this happen a couple times a year but the number of donors is not a large amount, We ask for documentation to show names and gift amounts from each individual at the time the total donation is sent to us. We then put the gifts on the individual records and send a gift receipt to each one. Our other organizations we have worked with have been really good about following this procedure. For donor relations, that gift letter is important for us to get out as well as recording the gift in the donors record for historical purposes. If for some reason there could not capture the donors information, then we use the Various People/Anonymous record.

Autumn Hubbard · July 2015

Our policy is that we can only receipt the indiv/org that the check/cash actually comes from. We experience this a lot with church offerings and tribute gifts. So, we will only send a gift receipt to the church, etc. Again, it's a matter of being able to prove things and what matches up to your records. If there is something of interest regarding a particular individual within the collected fund, we could either add it as a note attached to the gift or soft credit the individual.

Jen Claudy · July 2015

We had a situation like this crop up where most participants wrote out their checks directly to us and even though they were collected by another organization (a school), we deposited the money and receipted the gifts as if they had been sent directly to us. However, one group affiliated with the school decided to "encourage others and increase donations" by accepting credit card gifts, then they wrote a check to us, and after the fact requested individual acknowledgement letters for each donor (we had sent one letter to the group acknowledging the total amount).

Let's just say that I was not on the winning side of this issue, and we did send acknowledgement letters to the individual donors. We received a list of the individuals and the amount of thier credit card gifts and I added them as soft credits to the RE gift record. Then I ran the letters as a separate mailing and requested that the staff members editing the ack letter text consult with our Finance Dept and include any additional language they felt necessary.

I anticipate that this same situation, regardless of anything I do to try and prevent it, will happen again this year. As is my habit, I documented the issue on a Gift Note by copying and pasting all related email threads (as I say, "document the heck out of it").

Ryan Hyde · July 2015

We typically provide a thank-you letter to individual donors in this situation, but we get rid of the IRS tax information that we typically include at the bottom. To my understanding (I'm not the one who initiated this policy and I'm certainly not a tax professional), this prevents the letter from being considered a tax receipt issued by us, but it does help to steward the donor. When people request an actual tax receipt, we explain the situation and tell them to consult a tax professional.

Receipting individuals for collected funds

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