Year-End Reminder - What a Difference a Day Makes

What prompts the flurry of calendar year-end gifts?  That all important – to many of your donors – current year charitable deduction.  A day late, a gift made on January 1^st rather than December 31^st, and the deduction is “lost” for a year.  Of course, a day can make a difference throughout the year, by changing what discount rate is used for calculating the deduction or in determining the amount of a first gift annuity payment. But it is of particular significance at year-end.

And so, a few examples on when that gift actually occurs:

• Cash (check)

If handed to you in person, the gift is made that date. . . unless the check is post-dated (i.e., written for a future date). In that situation, the gift is made as of the date on the check.

If mailed to you, the gift is made as of the postmark date. . . this is known as the mailbox rule.  It applies when sending through the US Postal Service, but not when using a private courier service.  Whoever is charged with opening the mail should understand the importance of keeping the envelope. A check might be dated December 31, but if the postmark is January 2, the gift has been made in the new year, not the old.   

• Stock

When transferred electronically, the most common practice, the gift is complete on the date the shares are received in the charity’s account.

If a donor hands over actual paper certificates and powers, then the gift date is determined the same as noted above for cash, depending on whether done in person or via the mail. And if the transfer is being completed by reregistering ownership of the shares, the date of the gift is the date of the new stock certificate. Note that reregistering ownership of stock shares can take up to several weeks and so it is wise for donors to avoid this approach near year-end.

• Credit card

The gift is made as of the date the charge is posted to the donor’s account. The amount charged by the donor is the amount of the gift. . . any fee assessed to the charity does not reduce the gift amount, but is a cost absorbed by the charity.

May your organization receive many timely gifts this month!