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(Part of a series of articles on charitable giving and the Union County Foundation by David Vollrath - Exec. Dir.) If you took Latin in high school you might be able to answer a Jeopardy game show puzzle that reads… The Latin phrase translated "this for that" Answer: What is Quid Pro Quo? When a donor makes a gift to charity and in turn receives a tangible benefit the donation is considered to be a quid pro quo gift. What are the rules surrounding such gifts? Sometimes such gifts generate a full charitable deduction and in some cases a portion or none of the gift is deductible. A payment to a public college for tuition does not qualify for a charitable deduction. In this example even if the parents make the gift to a charitable organization as long as the gift is in effect paying the child’s tuition there is no qualifying deduction. Payments for items purchased at fund raising auctions qualify for a charitable deduction only to the extent that the amount paid exceeds the fair market value, and that the excess is intended as a charitable contribution. Payments for raffle tickets are not generally considered to be deductible in light of the fact that the "donor" is purchasing a chance to win a prize. One last example is a gift that entitles the donor to preferred seating at an athletic event. In this case 80% of the amount paid in excess of the ticket face value qualifies for a deduction. Generally if a donor receives a benefit for a gift over $75 then the receiving charity should provide the donor certain information in writing. That information should include a good faith estimate of the gift’s value and a statement to the donor that only a portion of the monetary gift may qualify as a charitable deduction. While these rules may seem burdensome the intended purpose is simply to make sure that the charitable deduction truly does equal the charitable gift value and does not include the value of an underlying benefit received. Like a lot of rules, we may not necessarily agree with them but we are subject to comply with them. By better understanding quid pro quo donations you can more effectively support philanthropy in Union County while at the same time maximizing your allowable charitable deductions. As is always the case you will want to consult your financial professional advisor(s) regarding your specific situation in regards to charitable giving. The Union County Foundation encourages you to consider your present and future charitable goals. The Foundation is equipped to help you achieve these goals by providing: planned giving and estate planning resource information, charitable gift annuities/life income plans, and a broad array of charitable choices. Please call us at 937-642-9618, email commfounduc@imetweb.net, reference our website at www.emarysville.com/unioncountyfoundation, or stop by our Marysville office at 126 N. Main St. We are committed to helping you.... “preserve your footprint in time.” |
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