Q: At
a recent special event many donors sent in contributions
to attend the event and did not show. I’m not sure
how to handle the acknowledgement letter. Should I recognize
their gifts as 100% tax deductible because they did not
receive any benefits? Or, should I acknowledge only the
deductible amount stated in the invitation, treating it
as if they did attend and reducing the tax deductible portion
by the fair market value of the benefits they would have
received had they come?
A: This
is another one of those questions that must be answered,
“It depends.” And, while some of your ticket
holders may be unhappy about it, what it depends on is what
they themselves did – or didn’t do – prior
to the event.
If they
told you initially that they’d give you a donation
equal to the price of a ticket but that you should keep
the ticket – perhaps try to resell it – because
they had no intention of actually attending the event, they
would be entitled to recognition of their gift at the 100%
level. The same would hold true for those that initially
accepted the ticket but sent it back ahead of the event,
specifying their desire to turn their original ticket purchase
into a pure donation. However, anyone that just didn’t
show would receive the same recognition letter as someone
who did attend. This means that they would get “credit”
for only that portion of the ticket price that was beyond
the fair market value of the benefits offered that evening.
Actually,
when you think about it, this is the most fair for the organization.
Undoubtedly, you had to rent a room large enough to hold
the expected number of donors, guarantee a certain number
of meals and so on. The fact that some people didn’t
show at the last minute doesn’t release you from your
commitments. Also, just because some of the people that
bought the tickets were unable to come, it doesn’t
mean that they didn’t give their tickets to others
that did benefit. In any case, the IRS says that those that
fail to turn back their tickets ahead of time and make their
donor intentions clear are to get recognition for the ticket
price minus the fair market value of the event, just like
everyone else.
