Development & Gift Management

FAQ: Fundraising for Community Foundations

council-webteam — Mon, 11 Nov 2013 17:21:17 +0000

FAQ: Fundraising for Community Foundations council-webteam Mon, 11/11/2013 - 12:21

FAQ: Fundraising for Community Foundations

Raising money for community needs is the central function of community foundations. No surprise, then, that we receive more questions about fundraising than about any other topic. Following are some common inquiries we receive by telephone and e-mail and the replies we give.

Documents for Donors

Q: What sort of documentation does the foundation need to provide to donors?

A: When an individual or corporation makes a gift of $250 or more, the foundation must provide a written acknowledgment. This may be a receipt or letter and must include the amount of the contribution (or a description of the gift if it is something other than money) and the value of any goods or services provided in exchange for the gift. If no goods or services are provided, the acknowledgment should state this. In order to claim an income tax charitable deduction, the donor must have this document by either the due date of the tax return that covers the period in which the gift was made or the date on which the tax return is actually filed, whichever is earlier.

If a donor makes a contribution of $75 or more that is part gift and part purchase of goods or services (say, a ticket to a benefit dinner), the charity must provide a receipt that indicates what portion of the contribution covers the fair market value (FMV) of the goods or services provided and what portion may be taken as a charitable contribution.

Contributions of items (other than cash or publicly traded stock) with a value of $500 or more may require the donor to complete IRS Form 8283 (which the community foundation must sign) and submit it with his or her tax return.

Q: If we hold a fundraising event and the food and entertainment are donated, do we still need to include the value of these items as goods and services provided?

A: Yes, the FMV of the event is based on the value of goods and services provided, not how much the community foundation paid for them.

Q: If we give out T-shirts or key rings with our community foundation's name and logo on them to donors, do we need to include the value of these items as goods and services provided?

A: No, there is an exception in the IRS rules for low-cost articles that are provided to donors in the course of a fundraising campaign. So long as the contribution is $38 or more and the items bear the community foundation's name or logo and cost less than $7.60 (a figure that is adjusted each year), the community foundation need not provide a value for the items, and donors need not reduce their charitable deduction.

Another exception in the IRS rules provides that where the value of the goods or services provided is less than the lesser of 2 percent of the contribution or $76, the goods and services will be considered to have insubstantial value. The community foundation will not have to provide a value to the donor and the donor will not have to reduce his or her deduction. This exception provides less relief than you might think; after all, 2 percent of a $500 contribution is $10, so any donor thank-you that is more than a coffee mug is likely to fall outside the exception.

Reporting to the IRS

Q: How should a community foundation show the revenue and expenses of a fundraising event on its Annual Information Return, Form 990?

A: A community foundation's best resource for this information is its (knowledgeable) accountant, but here are a few points to keep in mind:

The IRS expects to see fundraising expenses on the information returns of public charities and may be curious about the operations of a group that raises lots of money without expending any funds.
A contribution to a fundraising event may generate both revenue and a contribution for the community foundation. Revenue will consist of any payment that covers the FMV of goods and services provided; the contribution will be any amount that exceeds this FMV.
Fundraising expenses are to be broken down in Part II, column D of Form 990.
The IRS requires that public charities provide a schedule that sets forth the gross

receipts, contributions, gross revenue (gross receipts less contributions), direct expenses, and net income or loss (gross revenue less direct expenses) of their three largest special events, as measured by gross receipts. The schedule must also summarize figures for all the year's other special events.

Donor-Initiated Fundraising

Q: A group of donors would like to hold a golf tournament to raise money for a memorial fund. Can checks be made out to the community foundation?

A: Yes, but there are serious ramifications for the foundation. If a community foundation permits a donor group to use its name and tax exemption, the community foundation may well find itself legally responsible for all aspects of the fundraising event, from providing donors acknowledgments of their contributions to paying vendors if the event does not generate sufficient revenue to cover costs. The community foundation may also be the target of any liability claims that result from the event.

Community foundations that wish to permit what we call donor-initiated fundraising need to ensure that they have policies and procedures in place that allow them to exercise appropriate oversight in connection with these events. Community foundations that do not wish to permit these activities should take steps to inform donor groups that they may not use the community foundation's name or tax exemption for fundraising.

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Raising Money While Raising Hell: Catalytic Community Leadership and Successful Fundraising for Community Foundations

david.rosado@cof.org — Mon, 28 Aug 2023 17:48:11 +0000

Raising Money While Raising Hell: Catalytic Community Leadership and Successful Fundraising for Community Foundations david.rosado@cof.org Mon, 08/28/2023 - 13:48

Raising Money While Raising Hell: Catalytic Community Leadership and Successful Fundraising for Community Foundations

This paper debunks the myth that advocacy-oriented community leadership is naturally antithetical to fundraising, and highlights examples where foundations have built their fundraising efforts by playing advocacy-oriented community leadership roles.

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A Scan of Community Foundations Accepting Cryptocurrency Gifts

david.rosado@cof.org — Mon, 28 Aug 2023 17:41:08 +0000

A Scan of Community Foundations Accepting Cryptocurrency Gifts david.rosado@cof.org Mon, 08/28/2023 - 13:41

A Scan of Community Foundations Accepting Cryptocurrency Gifts

With the proliferation of bitcoin and other forms of digital (or "crypto") currencies around the world, a growing number of charitable donations are being given via these transaction vehicles. To what extent have community foundations entered this space? Which cryptocurrencies are the most popular in the field, and which are the most popular digital payment platforms? And how do processes surrounding these gifts differ across the field? CF Insights conducted a survey of U.S.-based community foundations to explore these questions, and more.

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Accepting Cryptocurrency as Charitable Contributions

EmMoses — Mon, 30 Jan 2023 12:54:37 +0000

Accepting Cryptocurrency as Charitable Contributions EmMoses Mon, 01/30/2023 - 07:54

Accepting Cryptocurrency as Charitable Contributions

A resource for community foundations.

Accepting Cryptocurrency as Charitable Contributions will help community foundations navigate questions and concerns around receiving cryptocurrency as charitable contributions. Get comprehensive, state-by-state information from the Council's Legal Resources Team on how your foundation can process any of the 6,000-and-growing cryptocurrencies that may be gifted, including the tax treatment cryptocurrencies receive, what extra steps are needed to accept crypto gifts, and whether crypto is viewed as money for legal and tax purposes or as something else.

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Accepting Charitable Contributions from Cannabis Businesses

emily.moses@cof.org — Fri, 15 Jul 2022 16:57:13 +0000

Accepting Charitable Contributions from Cannabis Businesses emily.moses@cof.org Fri, 07/15/2022 - 12:57

Accepting Charitable Contributions from Cannabis Businesses

A resource for community foundations.

With the sale and use of cannabis still federally prohibited while more states legalize it to varying degrees, the industry is creating far-reaching financial implications for the philanthropic sector.

“Accepting Charitable Contributions from Cannabis Businesses” will help community foundations navigate questions and concerns around receiving contributions from cannabis businesses.

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Charitable Solicitation Regulation and Other State Fundraising Regulations

ben.mcdearmon@cof.org — Thu, 02 Jul 2020 16:26:58 +0000

Charitable Solicitation Regulation and Other State Fundraising Regulations ben.mcdearmon@… Thu, 07/02/2020 - 12:26

Charitable Solicitation Regulation and Other State Fundraising Regulations

A Chapter in Mastering Foundation Law:
The Council on Foundations Compendium of Legal Resources

This chapter of Mastering Foundation Law reviews what foundation managers need to know about state-level regulations of fundraising: why and how states regulate fundraising; the basic requirements for compliance; and practical challenges that impact the day-to-day fundraising operations of charitable organizations, including community foundations. This chapter also highlights the implications of state policy issues that impact fundraising.

This chapter is divided into six different parts:

Overview of State Laws

This introduction provides a brief overview of state laws that regulate fundraising and the relevance for foundation managers, their grantees, and community foundations.

State Government Interest

Part one of this chapter offers a short explanation for why state government has an interest in regulating fundraising, and how state government exercises its rulemaking and enforcement authority over charitable organizations’ fundraising activities.

Glossary

Part two is a glossary of terms typically found in state fundraising regulations and explains these terms in plain language (non-legalese).

State Law Regulations

Part three offers an overview of state law regulations that govern charitable solicitation registration, identify challenges and uncertainties that exist, and explain how practices may change in the future as a result of a “single portal”, multi-state registration process. This section also includes a list of resources that may be useful for those seeking more details about charitable solicitation registration compliance obligations and offers suggestions for those seeking an outsourced solution to charitable solicitation registration compliance.

State Law Regulations (cont.)

Part four digs deeper into state law regulations relevant to fundraising, such as laws requiring paid professional fundraising consultants to register with the state, and regulations applicable to certain types of fundraising activities, such as raffles and commercial co-ventures. This section also includes a reminder about the self-dealing rules that restrict foundation managers from using grant dollars to attend grantee fundraising events.

Implications of Policy Issues

Part five introduces the practical implications of policy issues related to fundraising regulations that foundation managers will want to monitor because of the impact of those policies on their grantees and on a foundation's own operations.

Bibliography

Part six is a bibliography of sources used for this chapter that may be useful for professional advisors or foundation managers seeking a deeper understanding of the topic of charitable solicitation registration and other state regulations that govern fundraising, the policies behind these regulations as well as some practice pointers on these issues.

We hope this chapter provides readers with a basic understanding of the regulatory environment surrounding fundraising and will be useful to help foundation managers and advisors spot compliance issues for their grantees and their organization’s operations. As such, this chapter is written from the perspective of both the foundation as grantmaker, and as an organization manager. Citations and legal authority can be found in parentheses and in the footnotes after the cited material.

Accessing this Chapter

As a benefit of Council membership, members can download this chapter for free. Nonmembers of the Council can purchase this chapter of the Legal Compendium in our store for $149.

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The PayPal Charitable Giving Fund Settlement and Variance Power

brian.kastner@cof.org — Tue, 04 Feb 2020 16:59:57 +0000

The PayPal Charitable Giving Fund Settlement and Variance Power brian.kastner@… Tue, 02/04/2020 - 11:59

The PayPal Charitable Giving Fund Settlement and Variance Power

Why Disclosure Matters

A multi-state settlement agreement between PayPal Charitable Giving Fund (PPGF) and almost two-dozen states was announced to address issues of transparency and PPGF’s website disclosures. One notable area about which state regulators raised concerns was disclosure by PPGF of the fact that PPGF could exercise its “variance power.

Variance power is a common topic of conversation at the Council and community foundations often ask how explicitly variance power must be disclosed to donors. Per the settlement agreement, PPGF must modify its disclosures to ensure that donors:

know they are donating to PPGF and not directly to the eventual charitable recipient;
the fees associated with use of the platform;
the length of time it may take for a gift to reach its eventual charitable recipient; and
that PPGF has the ability to redirect gifts to other charitable recipients using its variance power (and PPGF must inform donors when this happens).

The settlement also requires disclosure regarding the advantages of being a PayPal enrolled charity compared with a nonenrolled charity.

While the settlement agreement only applies to this specific case, the issues highlight state regulators’ concern about transparency and disclosure to donors by charities that sponsor donor advised funds. The National Standards for U.S. Communities Foundations™ program has long required disclosure of a community foundation’s variance power to its donors, whether that be in a fund agreement or in separate policies or guidelines.

A helpful article with more information on the settlement agreement can be found at https://www.perlmanandperlman.com/paypal-giving-fund-enters-multi-state-settlement-ensure-transparency-donors/.

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Gifts of Cryptocurrency and Charitable Acknowledgments: IRS FAQs Provide Guidance

brian.kastner@cof.org — Tue, 04 Feb 2020 16:58:31 +0000

Gifts of Cryptocurrency and Charitable Acknowledgments: IRS FAQs Provide Guidance brian.kastner@… Tue, 02/04/2020 - 11:58

Gifts of Cryptocurrency and Charitable Acknowledgments: IRS FAQs Provide Guidance

The IRS published 45 FAQs related to virtual currency (Bitcoin and other cryptocurrency), and foundations should note two of these questions address charitable acknowledgment of such gifts as well as IRS reporting requirements.

Briefly, a contemporaneous written acknowledgment is required for gifts of crypto-currency similar to other gifts, but cryptocurrency is treated as a property gift (other than cash) and may also require completion of IRS form 8283 by the donor depending on the value of the gift.

With respect to IRS reporting, cryptocurrency is reported on the 990 as a non-cash gift, and on Form 990, Schedule M if applicable. Donee organizations must also file IRS form 8282 if all or a portion of the cryptocurrency is sold, exchanged or otherwise disposed of within three years. This includes converting the cryptocurrency into cash.

More details, including all the other FAQs, can be found on the IRS website.

FAQs on Virtual Currency Transactions

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Sample Gift Acceptance Policy

michelle.tucker@cof.org — Fri, 15 Feb 2019 19:12:27 +0000

Sample Gift Acceptance Policy michelle.tucke… Fri, 02/15/2019 - 14:12

Sample Gift Acceptance Policy

Sample policies for gift acceptance, including ethical standards, who has authority to accept gifts on behalf of the foundation, types of gift assets, and more.

This sample document is being provided for informational purposes and is not to be shared without the permission of the Council on Foundations. Use of the sample document does not create an attorney-client relationship, and the information provided is not a substitute for expert legal, tax, or other professional advice tailored to your specific circumstances. The information may not be relied upon for the purposes of avoiding any penalties that may be imposed under the Internal Revenue Code.

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Sample Gift Acceptance Policy

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Sample Gift Acknowledgement Letter for IRA Transfer

michelle.tucker@cof.org — Fri, 15 Feb 2019 19:01:02 +0000

Sample Gift Acknowledgement Letter for IRA Transfer michelle.tucke… Fri, 02/15/2019 - 14:01

Sample Gift Acknowledgement Letter for IRA Transfer

This document is a customizable gift acknowledgement letter for an IRA transfer.

Development & Gift Management

FAQ: Fundraising for Community Foundations

FAQ: Fundraising for Community Foundations

Documents for Donors

Reporting to the IRS

Donor-Initiated Fundraising

Questions?

Related Events

Related Resources

Raising Money While Raising Hell: Catalytic Community Leadership and Successful Fundraising for Community Foundations

Raising Money While Raising Hell: Catalytic Community Leadership and Successful Fundraising for Community Foundations

Questions?

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A Scan of Community Foundations Accepting Cryptocurrency Gifts

A Scan of Community Foundations Accepting Cryptocurrency Gifts

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Accepting Cryptocurrency as Charitable Contributions

Accepting Cryptocurrency as Charitable Contributions

A resource for community foundations.

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Accepting Charitable Contributions from Cannabis Businesses

Accepting Charitable Contributions from Cannabis Businesses

A resource for community foundations.

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Charitable Solicitation Regulation and Other State Fundraising Regulations

Charitable Solicitation Regulation and Other State Fundraising Regulations

A Chapter in Mastering Foundation Law: The Council on Foundations Compendium of Legal Resources

Overview of State Laws

State Government Interest

Glossary

State Law Regulations

State Law Regulations (cont.)

Implications of Policy Issues

Bibliography

Accessing this Chapter

Questions?

Related Events

Related Resources

The PayPal Charitable Giving Fund Settlement and Variance Power

The PayPal Charitable Giving Fund Settlement and Variance Power

Why Disclosure Matters

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Related Events

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Gifts of Cryptocurrency and Charitable Acknowledgments: IRS FAQs Provide Guidance

Gifts of Cryptocurrency and Charitable Acknowledgments: IRS FAQs Provide Guidance

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Sample Gift Acceptance Policy

Sample Gift Acceptance Policy

Download Document

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Sample Gift Acknowledgement Letter for IRA Transfer

Sample Gift Acknowledgement Letter for IRA Transfer

Download Document

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A Chapter in Mastering Foundation Law:
The Council on Foundations Compendium of Legal Resources