The Catholic University of America

Responsibilities of Director of Planned Giving

Federal Law

Intellectual Property Donations: American Jobs Creation Act of 2004

Under a provision of the American Jobs Creation Act of 2004, for contributions of patents and certain other intellectual property made to a 501(c)(3) after June 3, 2004 the taxpayer's initial contribution deduction is limited to the lesser of the donor's basis in the contributed property or the FMV of the property. The donor of intellectual property will be able to claim a second deduction related to the amount of money the charitable organization earned from the property during a certain time period after the donation. The University, as donee, must file an annual information return that reports qualified donee income for the taxable year if the donor filed timely notice of the donor's intent to treat a charitable contribution as a qualified intellectual property contribution and net income was produced by the donation and the income was received or accrued during a 10 year period beginning on the date of contribution.The donee is absolved of the need to file a return after the expiration of the legal life of the property. See the page linked above for more information. The Director of Planned Giving is responsible for alerting the Controller regarding gifts of this nature so that any necessary return can be filed.

Donee Responsibilities with Respect to Charitable Contributions

I.R.C. § 6115 provides that charities (donees) must provide timely written disclosure statements to contributors (donors) who make payments described as "quid pro quo" contributions in excess of $75. See Quid Pro Quo Rules.

I.R.C. § 170(f)(8)(A) provides that no deduction will be allowed for the donor under I.R.C. § 170 for a contribution of $250 or more (whether in cash or property) unless the donor has a contemporaneous written acknowledgment from the charity (donee) substantiating the contribution. See Substantiation and Disclosure Provisions.

The Director of Planned Giving is responsible for ensuring a process is in place to provide written substantiation of gifts where necessary. The Director of Planned Giving also has oversight of the the rules with respect to Non-Cash Contributions. This involves completing Section B of Form 8283 where necessary, and also completing Form 8282, the Donee Information Return.

The Philanthropy Protection Act (1995)

15 U.S.C. § 80a-51

The Philanthropy Protection Act of 1995 requires the charity to provide a disclosure statement to all annuitants in a Gift Annuity Fund and also to provide the same to all prospective donors at the time of solicitation, using a letter or pamphlet format. See the sample notification letter provided by the American Council on Gift Annuities.

The Act requires exempt charitable organizations that commingle investment assets to provide donors with written information describing the material terms of the operation of the fund. Exempts charitable organizations, when trading for the institution's own account, from federal security laws (except anti-fraud) and from state securities laws unless new state legislation is adopted by December 7, 1998. Unclear whether disclosure is required with respect to all funds covered by the Act or only with respect to planned giving vehicles where the donor (or the donor's beneficiaries) have a financial interest in the investments of the fund or the organization operating it.

The Philanthropy Protection Act of 1995 prohibits the payment of commissions or remuneration to anyone based on the value of a charitable gift annuity given to a public charity.

The Director of Planned Giving is responsible for ensuring that the disclosure statement is provided to all annuitants and written information on the material operation of the fund if required.

State Law

Uniform Prudent Management of Institutional Funds Act

The Law: This chapter establishes guidelines for the management, investment and expenditure of funds held by charitable institutions for charitable purposes; establishes standards of conduct in managing and investing such funds, establishes guidelines for the appropriation for expenditure or accumulation of an endowment fund, permits the delegation of management and investment functions, and provides for procedures for the release or modification of restrictions on management, investment, or purpose of a fund, and establishes standards for compliance with the Act. The Director of Annual Giving is responsible for identifying funds where UPMIFA might allow release or modification of restrictions.

State Laws Regulating Charitable Solicitations

The Director of Planned Giving is responsible for filing and maintaining the necessary registrations required by states for charitable solicitations and gift annuities. The Director of Planned Giving will consult with the OGC on what states require filings.

Filing Requirements

Maryland

Gift Annuities

Charitable Gift Annuity Annual Report: Due July 30th annually
CUA was granted a special permit on May 11, 2007 to make annuity agreements with donors in accord with Section 16-114 of the MD Insurance Code. An annual report is due within 90 days after termination of CUA's fiscal year. All that is required is that we send a copy of our audited financial statement (see the PriceWaterHouseCoopers doc) to them for the most recent fiscal year. This should be mailed to Chineta Alford, Director of Company Licensing, Maryland Insurance Administration. (this from Phyllis Gilpin at 410-468-2206). (OGC file #07012)

Solicitations

Charitable Solicitation Registration Renewal: Due Oct. 31th annually
CUA became registered on July 6, 2007 to solicit charitable contributions in Maryland. This registration was required under a new law (HB 398) enacted in 2006. The Annual Update of Registration Form must be filed by Oct. 31 of each year, along with a signed copy of IRS Form 990 and the most recent audited financial statement.  Additional documents that must be filed are listed on the Form. (OGC File #07018)

Maryland Charity Forms Web Page

Florida

Gift Annuities

Florida Code Section 627.481

Form to be used to Register to offer Gift Annuities: Florida requires filing a "Sworn Statement in Lieu of Annual Statement for Issuers of Donor Annuity Agreements" (sworn statement) by a non-profit that seeks to offer gift annuities. This form must be filed annually by June 30th with the Florida Insurance Administration. In addition, any annuity agreement for an IHE must contain the following language:

"This agreement is the entire contract between the parties, with rights and responsibilities of each party to the other as set forth herein. The donor or annuitant shall not have recourse against any assets of the state other than any funds or assets donated by, or funds derived from any assets donated by, the donor as set forth herein."

Month Filing Requirement Next Due
January    
February    
March    
April    
May    
June Florida Gift Annuity due 6/30 annually  
July MD. CGA Annual Report  
August    
September    
October MD. Charitable Solicitation Renewal 10/31annually  
November    
December    

 

The Giving Institute publishes an Annual Survey of State Laws Regulating Charitable Solicitations. This document summarizes state laws regulating charitable solicitations and provides addresses for the office in each state to register or request an exemption.

Questions and Answers on Charitable Contributions

Q. How does the university determine the fair market value of goods and services provided by the university to a donor?

A. An organization may use any reasonable method to estimate the fair market value of goods or services it provided to a donor, as long as it applies the method in good faith. The organization may estimate the fair market value of goods or services that generally are not commercially available by using the fair market value of similar or comparable goods or services. Goods or services may be similar or comparable even if they do not have the unique qualities of the goods or services being valued.

Q. Is there a specific form that I must use to acknowledge the gift?

A. Although there is no prescribed format for the written acknowledgment, the university must provide enough information to substantiate the amount of the contribution. Letters, postcards or computer-generated forms may be acceptable. The acknowledgment does not have to include the donor's social security or tax identification number. It must, however, provide sufficient information to substantiate the amount of the deductible contribution. The acknowledgment should note the amount of any cash contribution. However, if the donation is in the form of property, then the acknowledgment must describe, but need not value, such property. Valuation of the donated property is the responsibility of the donor. The written substantiation should also note whether the donee organization provided any goods or services in consideration, in whole or in part, for the contribution and, if so, it must provide a description and good-faith estimate of the value of the goods or services. If, on the other hand, the donor received nothing in return for the contribution, the written substantiation must so state. If the goods and services fall under the definition of "insubstantial value" (noted above), then the form may state that no goods or services were received.

Q. Should I provide a written or verbal estimate to the donor on the value of property donated?

A. The IRS does not require the donee to put a value on the property, and in specific instances (gifts over $5,000) providing a value is prohibited by the requirements of the Internal Revenue Code. When the value of the property donated is over $5,000, a qualified appraisal may be required, and the donee may not be the appraiser.2

For gifts of less than $5,000, the law allows but does not require the donee to suggest a fair market value for a non-cash gift. The specific statutory language relating to the written acknowledgment that a donor must obtain to claim a deduction for gifts of $250 or more reads as follows: "The amount of cash and a description (but not value) of any property other than cash contributed."3 The Code of Federal Regulations interpreting the same statutory provision reads in relevant part as follows: "The amount of cash the taxpayer paid and a description (but not necessarily the value) of any property other than cash the taxpayer transferred to the donee organization."4 As the law is not definite for gifts under $5,000, the party accepting the donation should follow university policy when accepting donations of gifts in kind. Donors may be referred to IRS Publication 561, Determining the Value of Donated Property, as well as IRS Publication 526, Charitable Contributions.

Q. What is the time frame for acknowledging a gift?

A. When a donor makes a gift of $250 or more, and wishes to take a tax deduction on that gift, the donor is under an obligation to obtain the acknowledgment no later than the date the donor actually files a return for the tax year in which the contribution was made. If the return is filed after the due date or extended due date, then the substantiation must have been obtained by the due date or extended due date.

If the gift involved a quid pro quo contribution, then the time frame may be more stringent. When the contribution falls under the category of a quid pro quo contribution of $75 or more (see above) the IRS takes the position that the donee must provide the disclosure statement at the time the solicitation is made, or at the time the donation is received. See the 1997 EO CPE Text at page four.

On the other hand, Joseph Irvine, tax counsel for Ohio State University, questions whether or not this more stringent time frame is really required. Joe notes as follows:

It is clear that a donor, regardless of the type of contribution, does not need to obtain a receipt until filing his or her tax return. 1.170A-1(h)(4)(i) states: For purposes of section 170(a), a taxpayer may rely on either a contemporaneous written acknowledgment provided under section 170(f)(8) and section 1.170A-13(f) or a written disclosure statement provided under section 6115 for the fair market value of any goods or services provided to the taxpayer by the donee organization. IRC 170(f)(8) also defines "contemporaneous" the same way (i.e., filing the tax return).

What is less clear is when a donee organization must issue the receipt for a quid pro quo contribution. The IRS CPE text cited requires issuance no later than the time of the contribution. The CPE is not authoritative and only expresses the IRS view. It is apparently based on the language in 6115 that says: "...in connection with the solicitation or receipt of the contribution, provide a written statement... ." The IRS reads "in connection with" to mean at the same time. With the specific reference in 170(f)(8) to the timing of the receipt, one could argue that "in connection with" should be interpreted as meaning contemporaneous. However, 1.170A-1(h)(4)(i) does differentiate the written acknowledgement from the written disclosure statement. (I think most charities and practitioners consider them to be the same thing.) Why would the donee be required to provide the disclosure prior to the time the donor is required to obtain it? Given the specific reference to time in 170(f)(8) and the general reference in 6115, using the general rules of statutory interpretation, the specific would control (but according the regulation we are technically talking about two different documents; however, the code makes no distinction between the two and I doubt Congress intended the two to be seen as different). So I think one can argue that "in connection with" should have the same meaning as "contemporaneous." (posted with permission of Joseph Irvine, from an email dated August 3, 2006).

Resources

Information on Donated Property for Charitable Organizations:
IRS web page providing information about filing requirements of charities that receive charitable contributions of donated property. Beginning with the 2008 tax return (filed in 2009) organizations that receive donated property will have to file Schedule M with the 990. Also on this web page there is a summary of the other reporting requirements , such as the written acknowledgment for a charitable contribution of $250 or more, the written disclosure statement for a quid pro quo contribution, Form 8282, and 8899, as well as forms for vehicle donations.

NACUANOTES Dec. 19, 2006 The Pension Protection Act of 2006: Charitable Giving and Reform Measures Impacting Colleges and Universities: This is an excellent resource that gives an overview of all sections of this new law that impact colleges and universities, including the provisions on charitable substantiation. Many helpful hyperlinks included.

IRS Forms, Publications and Notices

IRS Publication 1771, (rev.6/10)  Charitable Contributions-Substantiation and Disclosure Requirements

Form 8283 and Instructions, and IRS Publication 526, Charitable Contributions. Donors may be referred to Publication 561, Determining the Value of Donated Property, as well as to the other documents listed above.

Notice 2006-96: Guidance on "qualified appraisal" and "qualified appraiser". New definitions of these terms, per the Pension Protection Act of 2006.

Related Policies

Gift Acceptance
Gift Planning

 links checked and updated 09/13/10 TOL