Hi,
We have a yearly event that is under another non-profit (in fact there are many non-profits that participate in this event). Checks/donations come to us first and then go directly to this other non-profit to deposit, and they in turn send us a few large checks to cover the donations they received on our behalf. Currently we enter the the checks as pledges and then when the bigger checks come we will pay off the smaller pledge. Which I think is going to be a nightmare - I came after they set up this procedure. Does anyone else deal with a situation like this - if so how do you handle it? I've spoken to other non-profits that participate in this event, and some enter the gifts as Other.
Any help will be greatly appreciate.
Thanks
Julianne
julianne@crossroads4kids.org
The first thing that needs to be determined is whose event is it legally, and if it is a charitable event for which a donor can take a deduction, and if so, what is the donation portion of the 'gift' versus the goods and services portion. I admit to being confused as to why the checks would come to you and you not deposit them. Are they not made out to your organization?
One way to think of it is that the IRS follows the money; whoever deposits those checks must receipt the donor in accordance with IRS regulations.
There are a couple of ways I can think of to deal with this
If the checks come to you and they are not made out to you so you forward them to another organization. I would do nothing until the other organization actually sends you the check and they should send the breakdown of who the donors are. At this point I would enter the check on the other organization's account (hard credit) and soft credit the list of donors that were sent with the check.
or
You could put pledges in and have the pledges paid off by the other orgs check - but to me you are inflating your gift count by doing this and therefore cutting down the average amount given by a donor because you are adding all of these revenue donors to your organization when there truly only is one donor. This could also affect other statistics that your org uses for assessments.
I would take a look at how other orgs handle United Way gifts - there are a few threads in this forum that address that.