Question:

Need your help with a question regarding foundations and taxable benefits to donors. If an athletic department cultivates someone by bringing them on an away football trip or to a bowl game, and the "value" of what they get for free in any one year is more than $600, is the amount over and above $600 taxable income to the donor? How does your school treat this kind of situation?
- Ben Jay, Pacific-10 Conference

Responses:

The $600 threshold is for reportable payments made in the course of a trade of business. While donor cultivation is indeed the business of foundations I have never heard of it being a compliance area. Donor cultivation is the cost of doing business and presumably the benefit derived is to the foundation and not the individual. I have also reviewed the three primary reference texts I use and can find nothing on reporting the value of hosting donors. Finally, in order to be a reportable payment, there has to be a payment. Non-cash payments are usually fringe benefits provided employees. Being extra special nice to people in hopes they give you money is not covered in the regulations governing reportable payments.

In other words, I don't think so and it's not a compliance area I am worried about.

Of course, I am taking the facts on their face, that this is plain and simple donor cultivation, not hosting an officer of a related organization or an insider of any sort that might give rise to private inurement issues. That's another subject altogether and one the regs deal with extensively.

Hope this helps.
- Kathleen Rogers, Arizona State University