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Can A Business Accept Donations On The Behalf Of A 501c3?

Business Law discussions

Can A Business Accept Donations On The Behalf Of A 501c3?

Postby Ahmik » Thu Aug 25, 2016 4:43 am

And the question here really is: can the person actually making the donation write the donation off as a charitable contribution since a for-profit company is processing the donation and then transferring 100% to the charitable organization?  My accountant said we could set-up a master receipt once we donate(and we wanted to purchase blankets for the local homeless shelter). So in essence is it ok to collect $s and then use 100% of proceeds for a local 501c3 charity through the purchase of blankets or can we just transfer the $s to the shelter or is none of this ok.

ANSWER: If the individual wants to be able to deduct donations they must be given directly to a 501(c)(3) organization and then receive required receipts from the organization. As to charitable deductions for individuals:

See IRS Publication 526 "Charitable Donations"

www.irs.gov/pub/irs-pdf/p526.pdf

on page 18, "You can claim a deduction for a contribution of

$250 or more only if you have an acknowledgment of your

contribution from the qualified organization or certain payroll

deduction records. If you made more than one contribution of

$250 or more, you must have either a separate acknowledgment for

each or one acknowledgment that lists each contribution and the

date of each contribution and shows your total contribu-

tions."

Now if the donation is a lesser amount then the documentation is not required.  However, the 501(c)(3) organization may have a problem if audited and can not show that the individuals actually gave the funds to the 501(c)(3) organization that they claim to have given. The real question here is what are the details as to the whole transaction that the business is doing and not just what it wants to call the donation of the individual.  In fact, if an individual is making a purchase from the business at the time, then the full amount is a purchase price(unless the business gives the buyer the option to purchase at a lower price). Harvey Mechanic

Attorney at Law

[email protected]

---------- FOLLOW-UP ----------

So there is no way to collect $s as a pass through for the non-profit and the donator be able to deduct on their taxes.  Even if we email out receipts that say your $7.00 was donated to XYZ Homeless Shelter with Tax ID 123 that is a registered 501c3 organization. Then we get a main receipt from the 501c3 documenting the donation to the organization.
Ahmik
 
Posts: 45
Joined: Thu Feb 13, 2014 7:36 pm

Can A Business Accept Donations On The Behalf Of A 501c3?

Postby Roscoe » Thu Aug 25, 2016 10:43 pm

No, the IRS would not allow such. Otherwise, my uncle could donate money to the United Fund and ask them to send a receipt stating that someone else gave the funds. Legitimate charities do not want to make any material misrepresentations like that, especially in reference to the IRS.  Just think of the problems of the IRS if it has hundreds of people stating that they gave a donation of, let's say $7, and they only have something from a third party.

Harvey Mechanic

Attorney at Law

[email protected]
Roscoe
 
Posts: 46
Joined: Tue Jan 21, 2014 3:22 pm

Can A Business Accept Donations On The Behalf Of A 501c3?

Postby Hamlett » Mon Aug 29, 2016 12:26 am

And the question here really is: can the person actually making the donation write the donation off as a charitable contribution since a for-profit company is processing the donation and then transferring 100% to the charitable organization?  My accountant said we could set-up a master receipt once we donate(and we wanted to purchase blankets for the local homeless shelter). So in essence is it ok to collect $s and then use 100% of proceeds for a local 501c3 charity through the purchase of blankets or can we just transfer the $s to the shelter or is none of this ok.

ANSWER: If the individual wants to be able to deduct donations they must be given directly to a 501(c)(3) organization and then receive required receipts from the organization. As to charitable deductions for individuals:

See IRS Publication 526 "Charitable Donations"

www.irs.gov/pub/irs-pdf/p526.pdf

on page 18, "You can claim a deduction for a contribution of

$250 or more only if you have an acknowledgment of your

contribution from the qualified organization or certain payroll

deduction records. If you made more than one contribution of

$250 or more, you must have either a separate acknowledgment for

each or one acknowledgment that lists each contribution and the

date of each contribution and shows your total contribu-

tions."

Now if the donation is a lesser amount then the documentation is not required.  However, the 501(c)(3) organization may have a problem if audited and can not show that the individuals actually gave the funds to the 501(c)(3) organization that they claim to have given. The real question here is what are the details as to the whole transaction that the business is doing and not just what it wants to call the donation of the individual.  In fact, if an individual is making a purchase from the business at the time, then the full amount is a purchase price(unless the business gives the buyer the option to purchase at a lower price). Harvey Mechanic

Attorney at Law

[email protected]

---------- FOLLOW-UP ----------

So there is no way to collect $s as a pass through for the non-profit and the donator be able to deduct on their taxes.  Even if we email out receipts that say your $7.00 was donated to XYZ Homeless Shelter with Tax ID 123 that is a registered 501c3 organization. Then we get a main receipt from the 501c3 documenting the donation to the organization.
Hamlett
 
Posts: 48
Joined: Sat Jan 04, 2014 6:14 pm


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