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Friday, January 2, 2015
Is this donation for this year or last year? Be careful!
To Count or Not to Count
By Robb Hansen
As we flip the calendar to the first full week of 2015 on Monday, it’s probably worth reminding everyone what you can and cannot receipt as a donation for 2014 versus 2015.
For donations received in the U.S. Mail, the IRS considers any donation by check or cash as “countable” in the concluding tax year if it is postmarked by December 31. If the envelope is dated January 1 or after, the gift is to be credited to the donor’s account for the new year, irrespective of the donor’s wishes and irrespective of the date on the check.
This tight rule can be irritating to donors seeking to maximize tax deductions in the ending year. Understandably, they want their contribution to count for December and so receive a receipt allowing them to claim the donation for their preferred tax year. Unfortunately, organizations risk penalties related to their tax exempt status if it becomes clear they are accepting January donations and crediting them for the benefit of the donor in the previous year.
Electronic contributions must be completed by 11:59:59 PM in the time zone the donation is processed. Some sort of date and time stamp in a system verifying the contribution is sufficient to establish the gift’s tax deductibility for the December-ending tax year. Presumably processing systems located in Alaska and Hawaii do offer a few additional hours of advantage at the close of the year!
Our advice to organizations is that they maintain a strong stand on the December 31 cutoff for contributions to protect both themselves and their donors.
Robb Hansen is the president of Next Level Insights, Inc., a fundraising and communication company dedicated to furthering the effectiveness of nonprofits.
© 2015 Robb Hansen
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