Don't Cross the Red Line
The role of the gift officer is becoming increasingly complex. New tax laws and IRS regulations are placing gift officers at risk for crossing a red line that should never be crossed – the line between gift officer and financial or tax advisor. Even though much information may have been shared with them by the donor, gift officers need to know how to provide information to a donor without making assumptions about a donor’s complete financial or tax situation – assumptions that may be wrong and that could result in a donor not realizing the tax benefits they were assured of receiving.
Gift officers often tout tax savings as a benefit of a gift to their charity. It would be accurate to tell a donor they will receive an income tax charitable deduction for their gift (assuming your organization is a 501(c)(3) charity). But that deduction may not benefit the donor, depending on the amount of the deduction and whether the donor will itemize their deductions. A more appropriate statement from a gift officer would be that while the donor will receive an income tax charitable deduction, they should check with their tax advisor as to how it will affect their taxes, if at all.
The charitable IRA rollover (more precisely known as a Qualified Charitable Distribution or QCD) is another situation where the gift officer needs to not cross the red line. Under the law, a QCD can be made from a traditional IRA or Roth IRA. There are situations where a SEP IRA and SIMPLE IRA can also qualify for a QCD gift. Also, other tax qualified accounts can be rolled over into an IRA allowing for QCD gifts. However, the IRS has many technical rules around QCD gifts. A gift officer who has attended education sessions at planned giving conferences may be aware of the nuances of QCD gifts. However, it is vitally important that the information provided to the donor not become “how to” advice but rather “this might be possible,” sending the donor to their tax advisor for further guidance.
As the rules around charitable gifts continue to proliferate, the possibilities increase that a donor might not follow the rules. Should that happen the gift officer will want to make sure that their file is well documented, and the donor was advised (possibly multiple times) to consult their tax and financial advisors before moving forward to finalize a gift.