As we look ahead to a busy and inspiring season of events and conservation work, we are deeply grateful for the generosity that makes our mission possible. Our supporters allow the Conservancy of Southwest Florida to protect our region’s water, land, wildlife, and future through science, education, wildlife rehabilitation, and advocacy.
To help ensure that every gift is stewarded responsibly and in compliance with IRS regulations, we would like to share a few important reminders related to charitable giving, event participation, and asset transfers. These guidelines are intended to protect both our supporters and the Conservancy, while making the giving process as smooth and transparent as possible.
Below is a brief overview to help everyone prepare for the upcoming season.
Bifurcation is not allowed by the IRS.
There are a lot of great events scheduled for the upcoming season. As you register to attend or sponsor an event or purchase an auction item, please remember that the IRS does not allow for bifurcation of the payment for these items.
What is bifurcation?
Bifurcation is when a donor who is involved with a private foundation or donor advised fund asks the charity to split the cost of an event ticket, auction item, sponsorship, etc. in two, so that the “charitable” portion is paid with foundation assets and the “benefit” (fair market value) portion is paid by family members (or by the company).
For example, the cost of a table of ten at the fundraising dinner is $10,000, with the food and entertainment being assigned a value of $200 per ticket (or $2,000 for the whole table). In the bifurcation scenario, the private foundation or donor advised fund would write a check for $8,000, and the disqualified persons (e.g., foundation directors, officers, fund advisors, and substantial contributors and certain members of their families) would pay $2,000.
Even though bifurcation of payments may appear to be a logical and practical solution, the IRS still considers it self-dealing, which could trigger not only adverse tax consequences for the recipient charity but also impose an onerous excise tax on the private foundation or donor advised fund.
Event tickets and auction purchases:
If using a private foundation or donor advised fund to make a charitable contribution, any charitable benefit received through a sponsorship, membership, auction item, event tickets, etc., is considered self-dealing by the IRS and therefore, not allowed.
Gifts of securities and complex assets:
1. If you transfer stock to the Conservancy of Southwest Florida or any other charity, please contact them directly to ensure that the gift is identified and designated properly. Please do not assume that stock gifts are transferred with identifying information included.
2. Gifts of complex assets and securities require planning and some extra time. Please contact the receiving charity to discuss your intentions, as well as the requirements and timing of making your gift.
3. Your transfer from a brokerage account is complete when the securities have been received by an account owned by the charity, not upon giving instructions to a broker.
4. Initiate your transfers early, allowing several weeks. While some transfers may be received within days of your instruction, longer delays are possible. (i.e., mutual fund transfers can take two to five weeks)
Please consult your attorney or tax advisor for further clarification as to how this applies to your personal situation.
Thank you for your generosity and your continued support of our mission.