That sounds correct to me. Because you did not receive cash and have sole
control of the use of those funds (an unconditional cash gift), you are
limited to simply acknowledging (with thanks!) the repairs and reminding the
donor that he/she may be able to deduct the donation at fair market value
(and to check with their financial advisor for more information).
As the recipient, your obligation is to recognize that you actually received
the gift and that it was not part of an exchange or subject to conditions.
Cash gifts are the easiest to handle because you can state the amount
received. Other types of gifts (such as artifacts for the collection, labor
for restoration, or use of a car) can't be as easily valued without dispute
("That plumbing job didn't cost $500! I could have done it for $50"). The
best method is to provide a description of the services or goods received
and note that the donor needs to determine the fair market value for income
tax purposes (which they can do by keeping their receipts or showing
comparative values from a price guide). Indeed, the IRS doesn't allow
donees to appraise or provide valuations because it is a conflict of
interest (it avoids the "I'll give you my object if you promise to give me a
$10,000 appraisal"--laundering goods and services for tax deductions).
Of course, this is just the basics. Things get more complicated for special
types of gifts (e.g., restricted gifts, donations with conditions, volunteer
hours, travel as a volunteer). For more details, consult your financial
advisor or check out the "Church and Nonprofit Organization Tax & Financial
Guide" by Dan Busby (Zondervan).
Max A. van Balgooy,
Director of Interpretation and Education
National Trust for Historic Preservation
-----Original Message-----
From: Issaquah Historical Society Info [mailto:[log in to unmask]]
Sent: Wednesday, January 09, 2002 5:49 PM
To: [log in to unmask]
Subject: convoluted inkind donation question
Hi, all,
Here's a challenge I have come up against as I sit here getting all the
year-end IRS stuff pulled together. We have a donor/board member who wanted
to contribute the cost of extesnive facility repairs, to the tune of about
$1,200. Instead of giving us a donation of this amount, he hired a
contractor to do the work and paid him directly. Now I am trying to figure
out how we should acknowledge his gift for his tax purposes.
My rationale is that since no funds came in or out of our hands, it cannot
be considered a donation to us. Instead it is an in-kind donation. How does
this theory strike anyone else? Any suggestions?
Many thanks,
Erica
Erica S. Maniez
Museum Director, Issaquah Historical Society
425/392-3500
[log in to unmask]
www.issaquahhistory.org
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