Our front of house staff has been selling little museum logo buttons at $5 each to various visitors as way for them to donate and show their pride for our museum.  My problem is, I've been given the cash for these gifts in one lump sum at the end of each week they are sold.  Because I don't know who each purchaser was and because they were given to me in bulk, I'm not sure how to record these gifts in RE.

Does anyone on the forum have any suggestions?  I'd imagine a similiar situation would be recording money collected from donation boxes. I've never done this either! 

Thanks, in advance, for any help anyone can give.

 -Michele

We've had this happen from time to time.  We enter the gift under our constituent: Unknown Donor and detail where $ is from in reference and/or notes.  If you get these type of gifts from several sources you could enter a separate constituent for 'museum desk,' donation box,' etc.  I wouldn't make to many "fictional" constituents, but we have certainly found our "unknown donor" constituent record helpful for these situations.

JoAnn

We also use a "Miscellaneous" constituent record where these types of gifts are recorded.  I definitely agree you shouldn't use too many "fictional" constitents (we had several at one time, which I merged to one record).  I would suggest only one such constituent record and using the reference line for the source of the gift e.g., "collection box" or "buttons," and use notes for more details if needed.  Another idea would be to use gift attributes with a drop down table, which would keep your sources consistent.

Leslie

I do not even see this as a gift.  The person purchased something of value.  I believe it should be entered only in your financial system as miscellaneous income - not as a contribution at all.

Since the buttons are presented as a premium for making a donation, it's a gift and the cost of the buttons is an expense.

I am not sure I agree.  According to IRS publication 526 and 1771 they would be making a gift only if the value of the gift was more than the value of the benefit they are getting.  I believe that buttons everywhere cost around $5 (retail) therefore I see very little if any gift at all. 

There is a token exception if the buttons bear the logo of your organization AND either the payment is more than $47.50 and the items cost less than $9.50 or the item given is less than 2% of the contribution amount - neither of which do I believe are valid in your case.

The IRS just does not let you give stuff to donors in exchange for giving unless you issue a quid pro quo receipt which outlines the amount they paid and the value of the items they received.  If the value is more than or equals the gift amount then there is no gift at all.  Most finance operations will only let you put into the contributions line the amount above the benefit value - therefore we would not enter anything in our development system for these payments.

I agree with Melissa -- the value of the logo pin is too close to the "Gift" amount  to make this a charitable gift.  I have been responsible for having logo pins made and they can cost more than $5.00 each.  This should not be booked as a donation in RE.

I would agree if the gift were being entered into a donor's record, but Michele is talking about entering a total received from total buttons sold into an "unknown" account so no receipt will be generated.  This means that the total value of button sales is for internal reporting only.

 Another example is our employee campaign -- ALL employee donors receive a premium that costs approximately $7.  So if an employee gives $1 the receiptable amount is $0 -- they don't get a receipt.  Regardless, we still want to count that employee as a donor and to record her $1 in our employee campaign total.

 Am I missing something?

Thank you all for your input and thoughts on this matter.  This is a very helpful discussion.

First we need to consider that if we are giving the donor these buttons because they gave a donation and they do contain our logo, they would count as an insubstantial gift if the value of the button was 10 cents (that's 2% of $5.00). 

It is a very small button but the consensus on this discussion seems to be that they would probably be valued at $5.00.  If so, I fear that the money given cannot be considered as a donation. 

What if the buttons cost, let's say  50 cents apiece to produce (I'll have to find out the actual end cost), we give all of them to donors and have money left over after expenses are factored out? 

-Michele Partridge

If you are giving them away in the museum shop and also happen to collect donations from some of the people then they are not a benefit for giving.  But if the only way you can get a button is to make a minimum $5 gift then you need to determine a fair market value (not cost) of that button and subtract it from the amount paid to get the donation amount. 

If it is only one of those tiny buttons then maybe the FMV is only $2 or $3 but you still need to decide how to record these in RE.  It is up to your finance office if they want you to record only the donation amount (above the FMV of the button) or if they want to splt the payment between a contribution fund and a fund for "other income" it is their choice.

I believe that the only time the production cost comes into factor is for token items - so if they cost $0.50 to produce then you would need to require a $25 donation for the token item exception to kick in.  If not a token item then you need to look at Fair Market Value - not production cost.

Again if the only way to get a button is to be a donor, then it is most likely be considered a benefit.  If you can get them in other ways - free in the gift shop or at events, for example, then it may not be a donor benefit.

This type of situation has been discussed a ton on the listserv at www.fundsvcs.org.  I suggest you also check the archives there if you have not yet.

Just in case anyone is interested in how we resolved this problem...

We determined that the buttons are not a benefit of donation as they are sometimes given out at events and in our gift shop if someone makes a large purchase.

We are entering them now in groups under the constituent "Anonymous Donor."

Thanks, again for everyone's input!

 -Michele

Just in case anyone is interested in how we resolved this problem...

We determined that the buttons are not a benefit of donation as they are sometimes given out at events and in our gift shop if someone makes a large purchase.

We are entering them now in groups under the constituent "Anonymous Donor."

Thanks again for everyone's input!

 -Michele