2018 newsletter cover

The December edition of GoFisch is live! Give GoFisch a read for:

  • Link to the top four most popular blog posts of 2017
  • A review of the firm’s successes in 2017 & a look ahead at 2018
  • Tips for setting charitable giving goals
  • Last minute year-end fundraising tips
  • News on how the new tax bill could affect Iowa nonprofits

Like what you read? Don’t forget to subscribe.

Girl hanging ornaments on tree

Merry Christmas and happy last day of the 25 Days of Giving Series! If you’ve been reading along throughout December, thank you. If you’ve happened upon the GoFisch blog just now, welcome. I hope to see you back here often.

Celebrating the holidays with children, be it family or friends’ children, can be an wonderful opportunity to “see” the magic and delight of the season through their experiences. The season of giving is also an opportune time to teach and reinforce the importance of a different kind of giving beyond the wish lists for Santa and filled stockings. Consider these few tips when teaching the future generation of philanthropists about why charitable giving is important, and how to practice charity during December…and all year round.

Think Tradition

holiday themed cupcakes

Just like decorating cookies, trimming the tree, singing carols, or any other one of your family traditions, charitable giving can be made into an annual family affair. Incorporate this in a way that works for you and your family. One idea is instead of the traditional advent calendar in which children would usually get a small toy or candy each day give some loose change or “gift” a charitable activity you can do together. For the money, the child can collect and then then at the end of the advent period have then donate their money to a cause they care about.

Talk About It Together

Similarly to how I counsel my estate planning clients on the importance of speaking with family members about decisions for their estate, it’s important to actually talk about charitable giving as a family. Indiana University Lilly Family School of Philanthropy conducted a study and found that children whose parents talk with them about donating are 20% more likely to give to charity than kids who do not have those conversations with their parents.

snowmen figurines

Visit local charitable organizations together. (Or, if that’s not accessible at least go online to the charities’ websites.) Introduce your child to what the charity does and why it’s important. Organizations whose missions align with your child’s interests are a good place to start. For instance, the kid who loves animals may be interested to know that the local animal rescue helps animals when they get lost or hurt.

Practice What You Preach: Volunteer Time

Charitable giving doesn’t just have to be monetary. When possible set up volunteer activities you can do together. However, volunteer opportunities for children can be limited, so don’t be afraid to get creative. If your kiddo loves riding her bike around the park, plan a day where you pick up trash around the park. If your son loves to help you plant flowers, see if he can help out at the community garden. Of course, youth organizations like scouting programs (for example), can be a great opportunity for your child to put charitable work into action. Kids, just like most of us, will better be able to “see” the impact of charitable giving when they experience it firsthand. (Note: volunteer time is not tax deductible, but out-of-pocket expenses associated with volunteer work are!)

child in front of stocking

Shared Generosity

From your year-end giving charitable dollars, set aside a portion specifically for the kids to decide how to allocate. Have them brainstorm on with you and provide them with any suggestions/charities to match the causes they care about. You could also try out a matching program. Explain to them that every dollar they save throughout the year and want to donate to charity, you’ll match. If you need a colorful visual explain with Monopoly money.

 How do you involve your entire family with charitable giving? I would love to hear your ideas. Remember, this doesn’t have to be your own children. If you’re a teacher or simply an involved aunt/uncle or grandparent you can still instill in children the important philosophy of why giving can be the best gift of all.
Questions about your own year-end charitable giving? Contact me by email or phone (515-371-6077) at any time. 
red ornaments Endow Iowa Tax Credit

Merry Christmas Eve and thank you for reading the 25 Days of Giving series! In the spirit of the holiday season I’m covering different aspects of charitable giving…perfect to get you thinking about your end-of-year giving.

There are many, many reasons Iowa is great place to live and work. One reason is the Endow Iowa Tax Credit Program—a smart way to stretch your charitable dollars. Iowa community foundations provide exclusive access to the Endow Iowa Tax Credit program. Giving through the Endow Iowa program allows Iowa taxpayers to receive a 25% Iowa tax credit, in addition to the federal charitable income tax deduction, for qualifying charitable gifts.

gift with glitter ribbon

The Endow Iowa Tax Credit Program provides unique opportunities to meet philanthropic goals while receiving maximum tax benefits. Highlights of this program include:

  • A variety of gifts qualify for Endow Iowa Tax Credits including cash, real estate, grain, appreciated securities, and outright gifts of retirement assets. In fact, appreciated assets, like stocks or real estate, can provide even better value because the donor may avoid capital gains taxes.
  • To be eligible, gifts must benefit an Iowa charity.
  • Tax credits of 25% of the gifted amount are limited to $300,000 in tax credits per individual for a gift of $1.2 million, or $600,000 in tax credits per couple for a gift of $2.4 million, assuming both are Iowa taxpayers.
  • Eligible gifts will qualify for credits on a first-come/first-serve basis until the yearly appropriated limit is reached. If the current available Endow Iowa Tax Credits have been awarded, qualified donors will be eligible for the next year’s Endow Iowa Tax Credits. Donors should be encouraged to to act as early in the year as possible to ensure receipt of credits as soon as possible.
  • All qualified donors can carry forward the tax credit for up to five years after the year the donation was made.

There is one “catch.” Funds can only be granted at a spend rate of 5% per year. It should also be noted that the Endow Iowa Tax Credits are capped. The Iowa Legislature sets aside a pool of money for Endow Iowa, and it’s available on a first-come, first-serve basis. Submitting an application at the beginning of the tax year is advised, as tax credits often run out toward year’s end. In fact, this year approximately $6 million in tax credits were awarded and there are no more available credits to be granted. However, you can submit your application to be placed on the wait list for 2018 tax credits.

In exchange for 25% Iowa tax credit and the opportunity to have an even greater impact on their philanthropic interests in the state of Iowa, now and into the future, the Endow Iowa Tax Credit Program should be seriously considered by all. Any questions or thoughts on how the Endow Iowa Tax Credit Program could mean big benefits for your finances and your state? Don’t hesitate to contact me.

25 Days of Giving: Global Trends in Giving 2017 Report

The 2017 Global Trends In Giving report is full of important and valuable statistics for nonprofit professionals. These stats can help direct your donor plans and marketing strategies.

2017 Global Trends in Giving Report

But, December is an incredibly busy month with all the year-end fundraising pushes, and reviewing policies in prep for the coming year. So guess what? I read it for you! (You’re welcome.)

The 17-page study published by Public Interest Registry (PIR) and Nonprofit Tech for Good surveyed a global sample of 4,100 donors in the time period from May through June of this year. (It should be noted that although global, the sample swayed very heavily toward a majority of females in North America—approximately 50% from the U.S. and 25% from Canada).

Here are just a few of the most important insights from the report:

  • Holidays inspired a majority of donors (61%) to give…with, not at all surprisingly,  Christmas, being the most inspiring of all.  

Holidays Global Trends in Giving

  • Planning your social media awareness and advertising for the year ahead? Facebook remains the undisputed champion of online donations.

Social media giving stats from 2017 Global Trends in Giving Report

  • Your nonprofit’s website should end in .org. 72% of donors trusted the “.org” domain extension the most, while only 29% trusted “.com” domains.
  • In an eye-catching statistic, 69% of Millennial donors volunteered in the past year. Of these volunteers, three-quarters donated money to that same nonprofit.
  • A majority of donor participated in a “sustainer” program. Of these programs, donors most often participated in monthly programs.

Sustainer program statistics from 2017 Global Trends in Giving Report

  • A majority (59%) of women, prefer to donate online over other avenues. Additionally, women were most incentivized to give via social media (27%), followed closely by fundraising events (25%).
  • 44% of donors participated in a crowdfunding campaign over the past year. (The survey defined crowdfunding campaign as: “A crowdfunding campaign is when an NPO or NGO uses a website or app to raise a specific amount of money to fund a specific project or program.)
  • Fundraising events can be effective with donors; 59% of donors have attended a fundraising event in the past year. But, different invitation platforms inspire attendees at different rates. Look to email for the highest return on attendance (38%), and for a triaged approach, pair email with social media and marketing at other associated events.

Fundraising Events - 2017 Global Trends in Giving Report
Again, these are a just a few of the most important figures picked from an extremely well done and well detailed report, 2017 Global Trends In Giving. If you give the report a read, what were the most unexpected and unique statistics to you? I’d love to hear your thoughts and insights!

For any aspect of charitable giving planning, execution, as well as training I’m happy to provide beneficial services to to help you and your organization’s mission. Don’t hesitate to reach out via email or phone (515-371-6077) any time.

We’re now well into the 25 Days of Giving Series and it’s my intent to provide different aspects and strategies of charitable giving. Given that it’s the season of joy, sharing, and love it’s a great time to be thinking about smart giving (the kind that doesn’t involve gift wrappings, stockings, or bows). Read on to learn how the charitable remainder trust could be a valuable giving tool. 

Charitable Remainder Trust, defined

A charitable remainder trust (CRT) is a split interest trust that pays out income to one or more non-charitable beneficiaries for life (or lives) or a term of years not to exceed twenty. The selected payout rate may not be less than 5%, and no more than 50%, of fair market value (FMV) of assets originally placed in trust. At the end of the trust term, the remaining trust assets (the remainder interest) is distributed to charity selected by the donor; the actuarial value of the charity’s remainder interest must be at least 10% at the time of the trust’s creation.

Benefits of a CRT

  1. Note that a useful attribute of a CRT is flexibility. Although Donor’s transfer of property to the trust is irrevocable, a CRT provides for Donor the right to change charitable beneficiaries.
  2. Note also the tax benefits of a CRT. Donor may receive a federal income tax charitable deduction for the value of the remainder interest in the year of the transfer, Donor may transfer assets without recognition of capital gain tax, and there is no estate tax on the property passing to Charity.

Two forms: CRAT and CRUT

CRTs take one of two forms: a charitable remainder annuity trust (CRAT) or a charitable remainder unitrust (CRUT). There are important differences:

A CRAT pays an annuity to the income beneficiary at a selected payout rate that is a percentage of the assets valued at the time of the trust creation. Additional contributions to the trust are not permitted.

A CRUT pays a percentage of the annual value of the trust assets, a unitrust amount, to the income beneficiary. Additional contributions to the trust are permitted.

Variations of CRUTs

Several variations of the CRUT are permitted under the Internal Revenue Code:

  1. A Net-Income CRUT (NICRUT) permits the trustee to distribute an annual payment that is the lesser of the specified percentage of value in that year, or the net income actually earned by the trust in that year.
  2. A NIMCRUT is a CRUT with a net-income limitation subject to a make-up provision. Like a NICRUT, the terms of a NIMCRUT direct the Trustee to pay the lesser of the specified percentage of the value of the trust assets in that year or the net income actually earned by the trust in that year. However, if the payout is less than the specified percentage is paid out in one or more years, the accumulated “income deficits” will be made up in a subsequent year from the excess income above what is the specified percentage of the value of the trust assets in that year.
  3. A Flip CRUT permits the trust to begin its existence as a NICRUT or NIMCRUT, then “flip” into a standard CRUT on the occurrence of a specific triggering event, as provided in the trust document. The flip option is attractive when Donor wishes to donate to the CRUT illiquid or hard-to-market assets, such as real estate or closely held stock.

butterfly on finger

​Knowing if the CRT is a best choice for your charitable giving can be difficult, so I advise speaking with your trusted professional advisors to evaluate your situation. This concept can be confusing, so don’t hesitate to reach out for more information and explore how a charitable remainder trust could be beneficial to you. Feel free to contact me at any time at Gordon@gordonfischerlawfirm.com or by phone at 515-371-6077.

Iowa Court Rule 39.18

I regularly help and encourage my clients to complete business succession planning. So, I was immensely interested in fully understanding and helping to explain the Iowa Court Rule 39.18 which mandates some aspects of practice succession planning for active Iowa lawyers. I wrote extensively on the subject in a four-part series for The Iowa Lawyer (you can find links to all the articles here). But, with the deadline for compliance fast approaching it’s useful to have just the basic. The ISBA recently published my rundown of nothing but the essential in The Iowa Lawyer Weeklyand for convenience I’m publishing it here as well.


This short article directly informs every Iowa private practitioner precisely what s/he needs to know about new Iowa Court Rule 39.18. Under the Iowa Court Rule 39.18, Iowa-licensed lawyers must take steps to prepare for their own disability or death. New questions that are related to Rule 39.18 compliance will be included on the Iowa Client Security Commission 2018 Client Security Reports to be filed via the Iowa Office of Professional Regulation between Dec. 26, 2018 and March 10, 2018 without penalty.

Two Tiers

Iowa Court Rule 39.18 is divided into two tiers; the first tier is mandatory; the second tier is optional. The second, optional tier is very helpful, and I’d urge every Iowa layer to seriously look at implementing it. Considering that I write this in mid-December, however, it may be wise for Iowa lawyers to make certain they are in full compliance with the mandatory provisions, and give the optional provisions more full and careful consideration in 2018. Since this article is about just the basics, I’m just going to discuss only the mandatory provisions of Iowa Court Rule 39.18.

planner on desk next to computer

Choose Designee and Custodian

Every Iowa attorney in private practice must choose and identify both a designated representative and a custodian. The term designee representative(s) is defined, while the term custodian is not. The designated representative (hereinafter “designee”) must be either an:

  1. active Iowa attorney in good standing;
  2. Iowa law firm that includes Iowa attorneys in good standing (including the attorney’s own firm); or
  3. qualified attorney-servicing association.

A “qualified attorney-servicing association” is a bar association, all or part of whose members are admitted to practice law in the state of Iowa; a company authorized to sell attorneys professional liability insurance in Iowa; or an Iowa bank with trust powers issued by the Iowa Division of Banking.

(Important note: Earlier this month The Iowa State Bar Association Board of Governors authorized The ISBA to serve as a qualified attorney servicing association.) Again, the term “custodian” in not defined. The custodian can be anyone – a fellow lawyer, friend, spouse, administrative assistant, whomever.

Clients Lists and Client Files

Additionally, every Iowa attorney in private practice is responsible for the following: (1) maintaining a current list of active clients in a location accessible by the designee; (2) identifying the custodian to the designee; and (3) identifying the locations of the client list, electronic and paper files, records, passwords, and any other security protocols required to access the electronic files and records for the custodian and, ultimately, for the designee.

Client list Iowa Court Rule 39.18 files

Death or Disability

Iowa Court Rule 39.18 kicks into action only in two extreme circumstances: your death or your disability (a disability so severe you can no longer practice law, whether temporarily or permanently). Upon your death or disability, your designee is given broad authority, including the right to review client files (whether paper or electronic or both), notify each client of your death or disability, serve as a successor signatory for any client trust accounts, prepare final trust accountings for clients, make trust account disbursements, properly dispose of inactive files, and arrange for storage of files and trust account records. Also, the designee is authorized to access passwords and other security protocols required to access electronic files and records. Finally, as a “catch all” provision, the designee may determine whether there is need for other immediate action to protect the interests of clients.

Read More About Iowa Court Rule 39.18

If you would like to read deeper beyond these basics, click to the September through December 2017 issues of The Iowa Lawyer from the online archives to read our four-part series. In the series, all the elements (mandatory and supplementary) of Iowa Court Rule 39.18 are reviewed and explained in detail.

There is also a list of additional resources that can be found here. If you’re an active lawyer in Iowa help your fellow counselors out and share this piece with them so they will be prepared not only for the Iowa Client Security Commission 2018 Client Security Reports, but in the off chance of unexpected death or a disability. If you have any questions as you set your plans in place contact me by email or phone (515-371-6077).

529 plan charitable giving

Family of all shapes and sizes plays a special role for most during the holidays. This brings to mind a different type of gift you can give to a loved one who is currently or planning on attending college. For the majority of the 25 Days of Giving series we’ve focused on charitable gifts made to nonprofit organizations. But, investing in a student’s future and helping to make higher education more affordable and accessible is certainly a valid cause…and has tax benefits of its own.

The 411 on the 529

Gordon Fischer Law Firm is dedicated to Iowans, so we’ll focus on the College Savings Iowa 529 plan, but know that all 50 states and D.C. sponsor at least one type of 529 plan. There are two types of 529 plans—prepaid tuition plans and college savings plans. The College Savings Iowa plan is a tax-advantaged program sponsored and administered by the Treasurer of the State of Iowa. The purpose? Just as the name “college savings” says, it is intended to “help an individual or a family pay for higher-education costs.”

girl in graduation robes

The account funds can be used by the beneficiary for any purpose, but for the withdrawals to be considered tax-free, the money must be used for qualified higher-education expenses at an eligible educational institution by the student. Eligible expenses include elements associated with higher education such as: tuition, mandatory fees, books, required supplies, computers (including related hardware and software), internet access, equipment required for enrollment/attendance, and even  room and board during any academic period where the student is enrolled at least half-time.

If withdrawals are made and not used for for a qualified expense, the deductions must be added back to Iowa taxable income and adjusted annually for inflation. Additionally, the earnings part of the non-qualified withdrawal may be subject to a 10 percent federal penalty tax on top of federal income tax. A great alternative to non-qualified withdrawals if the student doesn’t end up going to or paying for school, is transferring the money to another eligible beneficiary’s 529 account.

Who Can be a 529 Plan Beneficiary?

Your school years may be far behind you, but you can set up a 529 for any beneficiary. The only requirements are that the prospective or current student must be a U.S. citizen or resident alien with a valid Social Security number or other taxpayer ID number. The student doesn’t have to reside in Iowa or be related to you in any way. So, you could set-up a 529 for your niece, but also your friend’s son whom you’ve known since he was little…even if he lives in another state!

woman opening gift on couch

Federal, State, & Estate Tax Benefits

The most obvious benefit of College Savings Iowa 529 accounts is that contributed assets grow deferred from federal and state income taxes. Plus, “Iowa taxpayers can deduct up to $3,239 in contributions per beneficiary (student) account from adjusted gross income for 2017.” These contributions can usually be made up through the tax-filing deadline. (For example, you could make a tax deductible contribution for the 2017 tax year up until the end of April 2018.)

Beyond the $3,239 state tax deduction, you can contribute up to $70,000 in a single tax year for each beneficiary (or $140,000 as a married couple filing jointly) without incurring federal gift tax. This is provided you don’t make any other gifts to that student beneficiary over the course of five years. For the purpose of the contribution, it’s as if you made the $70,000 gift over the course of five years. Any additional gifts made to the beneficiary during that five-year period will incur a gift tax.

There’s another major benefit when it comes to the 529 and estate taxes. Money contributed to a 529 account is generally treated as a “completed gift” to the student beneficiary, but as the contributor/participant, you still have control over the money. If you were to die with money remaining in your account, it will not be included in your estate for federal estate tax purposes. In short, the 529 is a valid tool if your goal is to reduce the total of your estate to avoid the estate tax, but still help a student you care about.

In terms of estate tax, if you took option for the $70,000 contribution ($140,000 for married couples) to a 529 plan account as if it was made over five years and then you die within the five year window, a prorated portion of the contribution will be subject to estate tax. This can get a bit confusing so please speak with your trusted estate planning attorney or tax advisor for more personalized information.

What’s your experience with 529 plans? Any questions in regards to how contributing to a 529 plan could impact your tax savings? Don’t hesitate to contact me by email (gordon@gordonfischerlawfirm.com) or phone (515-371-6077).

woman holding ornament

Thanks for the reading the 25 Days of Giving series. Each day through December 25, I’m covering different aspects of charitable giving for both donors and nonprofit leaders. Have a topic you want covered or question you want answered regarding charitable giving? Contact me.

I’ve covered the term quid pro quo in a previous legal word-of-the-day blog post and much of that applies to understanding quid pro quo donations. In short, quid pro quo (now you know Latin!) translates to “something for something” and means an exchange of goods or services, where one transfer is contingent upon the other. In the case of nonprofit organizations, sometimes a good or service is offered in exchange for a donation. When the donor makes a charitable donation more than $75 and the nonprofit offers a good or service in exchange for said donation, the tax-exempt charity must provide a written statement to the donor disclosing the following:

  • Statement of the good(s) or service(s) received in exchange for donation
  • A fair market value (FMV) of the good(s) or service(s) received.
  • Information for the donor that only a portion of the total contribution (the portion that exceeds the FMV) is eligible for a federal income tax charitable contribution deduction.

What Nonprofits Need to Know

merry christmas event menu

As a nonprofit organization offering a quid pro quo donation situation, there’s a penalty for not making the required disclosure of contributions great than $75. The penalty is $10 per contribution up to $5,000 per fundraising mailer or event. If your nonprofit fails to disclose, but can prove the failure was due to a reasonable cause, the penalty may be avoided.

Offering a good or service as an incentive for a donation can be a great way to spark donor interest, but you’ll definitely want to determine the FMV and have a reasonable method, applied in good faith, for doing so. This can be easier said than done for goods and services that are not generally or commercially available. If that’s the case it’s recommended to estimate the FMV off of similar/comparable products and services that are available. Let’s consider a couple examples:

Example 1.  For a contribution of $20,000 an history museum allows a donor to hold a private event in a ballroom of the museum. The museum doesn’t typically rent out this room, so how can a FMV be determined if there’s no standard rate? Looking at other similarly sized and quality ballrooms in the surrounding, general area cost $3,000 a night to rent. So, even though the museum’s ballroom has unique artifacts, a good faith estimate of the FMV of the museum’s ballroom is $3,000. The donor would then have a charitable contribution deduction total of $17,000.

Example 2.   Your charity offers a one-hour golf lesson with a golf pro at the local country club to anyone who donates $500 or more. Usually the golf pro can be hired for a one-hour lesson for $100. An estimate made in good faith of the lessons’s FMV is $100.

Example 3. What if the service offered is unique, but is typically free? A state park foundation fundraiser advertises that a donation of $200 or more entitles you a spot on one of four different guided nature hikes with a volunteer park ranger. Typically the foundation doesn’t offer guided hikes to the general public, but hiking in the state parks is otherwise free. So, the FMV made in good faith for the hike is $0 and the charitable contribution eligible for deductions would be the full amount.

The only time you wouldn’t need to disclose the quid pro quo donation is when the good(s) or service(s) are of insubstantial value. The IRS also says disclosure is not required when the donor makes a payment of $75 or less (per year) and the exchange is only membership benefits that equate to, “Any rights or privileges (other than the right to purchase tickets for college athletic events) that the taxpayer can exercise often during the membership period, such as free or discounted admissions or parking or preferred access to goods or services.” The contribution can also stay undisclosed if the good/service is, “Admission to events that are open only to members and the cost per person of which is within the limits for low-cost.”

Basics of What Donors Need to Know

woman in winter with scarf

As a donor, if you’re making a contribution to an organization and receive something in exchange, know that it’s almost like you’re paying for the good/service you receive, but then can deduct the rest of the contribution.

Let’s say you make a charitable contribution of $100 to a 501(c)(3) organization that helps mistreated farm animals. To celebrate their anniversary, the organization is offering donors that gift $80 or more a large coffee table book filled with stories, poems, and photographs of the animals the organization has helped over the years. The book’s fair market value is $30. This FMV is based on the price if you were to buy it outright from the organization’s online shop. In this situation you as a donor would need to receive a written disclosure detailing your contribution amount ($100), FMV of the good (the book) received ($30), and the portion that is considered a tax-deductible charitable contribution amount ($70).

Even though the tax-deductible charitable contribution amount is $70 (less than the $75 threshold), the total donation was $100, so the charity is still required to provide a written disclosure.

Whether you’re a donor or a nonprofit leader, I’m here to help promote and maximize charitable giving in Iowa. Questions about written disclosure compliance or FMV calculation? Don’t hesitate to contact me.

pinecones with candle

If you’ve been reading along with the 25 Days of Giving Series throughout December, thank you. If you’ve happened upon the GoFisch blog just now, welcome! I hope to see you back here often.

Giving for the sake of giving is great, however it’s financially wise to make certain your charitable donation is also beneficial in terms of your taxes.

Charitable gifts are defined by the IRS, at least for the purpose of qualifying for a charitable deduction from federal income tax. A review of statutes and caselaw show that the IRS attributes several major characteristics to charitable gifts:

Charitable intent

snowflakes

There must be a clear and unmistakable intention on the part of the donor to absolutely and irrevocably to divest herself of both title and control of the property.

Irrevocable transfer

The irrevocable transfer of the present legal title and dominion and control of the entire gift to the charity so that the donor can exercise no further act of dominion and control over it.

Delivery

bus with tree on top

The donor must deliver the gift to the charity. (Delivery can be made through a number of ways. This could be hand-delivered, like dropping off a check. It could also mean a secure electronic payment made on the charity’s website. In the case of charitable gifts of grain this could mean physically delivering the grain to a specific silo.)

Acceptance

The charity must accept the gift. For instance, you may want to donate part of your modern art collection to your favorite nonprofit, but if the nonprofit doesn’t have the resources to accept or doesn’t want the collection for some reason, it’s not a charitable gift.

Qualified organization

The donee must be an organization recognized as charitable by the IRS. You can use this IRS online search tool for organizations to see if the charity you’re considering donating to is recognized as tax-exempt.


Want to be sure your charitable gift is indeed a tax deductible charitable gift in the eyes of the IRS? What about charitable gifts or life insurance or a retained life estate? It certainly doesn’t hurt to take me up on my offer for a free one-hour consultation. Give me a call at 515-371-6077 or shoot me an email at gordon@gordonfischerlawfirm.com.

gold and silver christmas gift

Thanks for the reading the 25 Days of Giving series! Each day through December 25, I’m covering different aspects of charitable giving for both donors and nonprofit leaders. Have a topic you want covered or question you want answered  regarding charitable giving? Contact me.

The vast majority of public and private universities and colleges are tax-exempt entities as defined by Internal Revenue Code (IRC) Section 501(c)(3) because of their educational purposes and/or the fact that they are state governmental entities. If this is the case, gave you ever wondered why tuition for a student to attend a university is not deductible as a charitable contribution? This is known in gift law as as a “personal benefit” transfer. The personal benefit of education for the student is equal to the tuition paid. Because of the benefit value, there is no charitable gift and therefore no federal income tax charitable contribution deduction.

university library

Another example of personal benefit transfer would be payment to a charity for specific services, and such payments are not deductible. In Hernandez v. Commissionerthe U.S. Supreme Court determined gifts of fixed amounts to the Church of Scientology (a tax-exempt religious organization) in exchange for personal counseling were not deductible. The Court held that such “gifts” were more appropriately considered payments for services rather than charitable contributions.

If you ever have a question if a charitable gift is tax deductible, don’t hesitate to contact me. It never hurts to get a second opinion on potential personal benefit situations, especially if the opinion can mean potentially avoiding an IRS audit.