Fundraising Policy 501 Frequently Asked Questions

plus-icon TO EXPAND

The FAQs for AAUW Fundraising Policy 501 provide answers, organized by topic, to fundraising questions members commonly ask. If you have questions about a specific policy area that has not been addressed, please submit them to connect@aauw.org.

Donations and Fundraising — AAUW’s Mission-Based Programs

 

Fiscal Integrity

How do we determine donor intent when unsolicited gifts are received, such as when a member gives money in excess of the required dues?

Local Donations: Donations to the branch without stipulation by the donor should be assumed to be given specifically to support mission-based activities of the branch. If in doubt, the branch should verify the intent of the donor. Caveat: Such donations are only tax deductible to the donor if the branch is designated by the IRS as a 501(c)(3) charity or if it is forwarded to AAUW national, which is a 501(c)(3) charity. Donor intent is the key.

AAUW Donations: If a donation is made to AAUW without any stipulations attached, the assumption is that the donation is intended to be used for any and all of AAUW’s crucial programmatic work. In this regard, the donation will go to AAUW Funds and be used to support AAUW’s mission-related work.

Each donation AAUW receives is reviewed to determine the intent of the donor. For example, gifts made by check are examined to see if the donor has made a notation that clarifies intent. If there is any reason to suspect that the donor may have intended but not specified a particular use — for instance, if that person typically gives to support a particular kind of AAUW work — staff will call the individual to verify the intent. If a donor receives an acknowledgment letter that does not specify what was actually intended by the donor, the donor should call AAUW for an adjustment.

Collaborations

What is the relationship between branches and local college/university partner members? How do we fundraise with them? If we collaborate with a college or university, does it matter if they are an AAUW C/U partner member or not?

Many branches work closely on programs and projects with C/U partner member institutions in their area. Many of the C/U partner member representatives participate in branch activities or are actually members of the branch — but not all. There is no requirement for branches, C/U schools, or C/U reps to collaborate, but it is nice to see that happen.

Many collaborative activities include mutual fundraising; a good example is when states/branches raise some of the funds needed to send students to NCCWSL, and the C/U partner schools they attend raise the balance. Often, campuses provide space for AAUW programs, such as Elect Her, $tart $mart, LAF Outreach Programs, Campus Action Projects, and so on. Of course, many branches collaborate with local colleges to offer scholarships and/or awards to students. It is strongly recommended that such collaborations involve schools that are C/U partner members. If the schools have not yet joined, branches can leverage the collaboration as a means to recruit them as AAUW C/U partner members by showing the benefits of engagement with AAUW.

Can a branch newsletter announce a mission-related activity of another organization?

Yes, as long as the organization is not supporting an initiative contrary to the public policy of AAUW and is not using the announcement to solicit donations. AAUW members are active in their communities, and that requires being knowledgeable about all kinds of local and national issues. Maybe branch members will want to volunteer for the activity you feature. And perhaps these other organizations will return the favor and announce some of your branch activities in their newsletters so their constituents can learn about AAUW.

Respect for the Intent of the Donor

What do you say to a branch that believes it doesn’t need to tell donors specifically how their donations will be used?

Notifying donors of how their donations will be/are being used is a fundamental obligation that the IRS expects the organizations it designates with nonprofit status to fulfill. It is also an ethical issue. If you are not forthright about how a donation will be used, you could undermine the trust of the donor or cause hard feelings and distrust from those who most want to support our work. Likewise gift acknowledgment must specifically identify the use of the donation, whether for general support of the organization or for a specific program. This gives the donor an immediate opportunity to correct any misunderstanding of intent.According to Charity Navigator, the best known of the charity-rating organizations, high-quality charities subscribe to the standards of the Donor Bill of Rights. The fourth of these 10 rights states that donors have the right to be assured that their gifts will be used for the purposes for which they were given. AAUW adheres to each of the 10 rights in the Donor Bill of Rights.

Do we need to worry about donated money where donor intent is unknown?

Donor Intent. Donor intent is a fundamental principle of nonprofit status. At all times, we are obligated to determine and fulfill donor intent with respect to investment of the gift and to make every effort to ensure that the donation is used as intended. Donations to AAUW or to an AAUW-affiliated entity are presumed to be used for general or program support of the entity to which it is given — not to be given to another organization for its use of the funds. (This does not preclude the branch from having an arrangement with a college to provide scholarships to its students on behalf of and in the name of the branch.)

Donor Intent Unknown. If the donor’s intent is unknown, the receiving organization must take steps to determine the intent. Even if the donor has passed away, it is essential to try to fulfill the intent of the donor. If that is impossible, then the assumption is that the money must be used specifically for the mission-based work of that branch or state or by AAUW national. This situation sometimes arises when branches find themselves reduced in membership but with significant assets to manage. AAUW staff often works with members to help them establish a self-managing process for fulfilling donor intent while furthering the mission. (To discuss such assistance, e-mail connect@aauw.org.)

Acknowledging Use of the Gift. Donations should be acknowledged with specific reference to the use of the gift — such as for general AAUW support and therefore allocated to AAUW Funds or for a particular project, like Tech Savvy. This is true of any donation, whether it is given to an entity that is a nonprofit 501(c)(4) or 501(c)(3) organization. The donor, therefore, is immediately able to tell if the donation is being used as intended — or if there is a misunderstanding that needs correction.

How does the timing of the donation relate to donor intent?

When a branch officer collects funds for donation to AAUW national, it is imperative that the donation be sent to AAUW immediately, with the name of the donor and the intended use of the gift so that the donor will receive a timely acknowledgment verifying the gift for tax purposes. The donation must be forwarded to AAUW national within the tax year in which the donation was made, unless the donor specifically states that this does not matter to her or him. For example, if the donor wants the money to go to the Legal Advocacy Fund, this should be specified so that the gift is applied as intended by the donor and acknowledged by AAUW national appropriately.

What is required by the IRS of AAUW and AAUW-affiliated entities as to notification of donors about tax deductibility of their donations?

The IRS requires that if a gift is given to a 501(c)(4) entity, the letter of thanks must specifically note that the gift is not tax deductible. If a gift is to be split between two entities, one of which is a 501(c)(3) and the other is not, the acknowledgment of the gift must state whether the donation “may be tax deductible to the donor” or is not tax deductible. This required language also helps the donor confirm that the donation is divided as intended. If the donor receives an item of value for the donation, such as a book, the donor must be told that the donation value is the amount donated less the “fair market value.” At the local level, without other stipulation by the donor, donations to the branch should be assumed to be given specifically to support mission-based activities of the branch.

 

IRS Regulations

 

AAUW-Affiliated Entities

Since AAUW’s IRS status designation was changed by the restructure, some may think that branches automatically became 501(c)(3) organizations as well. Is that correct?

No, branches are not automatically 501(c)(3) organizations through their affiliation with AAUW. AAUW branches are subordinate organizations of AAUW, but each gets its own nonprofit status designation directly from the IRS. Any change in nonprofit status must come through an IRS application and approval process that the IRS requires to be undertaken by the branch or state itself.

AAUW Affiliate Agreement

Why do we have Affiliate Agreements when the IRS controls it all?

The IRS views AAUW as the 501(c)(3) charitable “parent” organization of a group of “subordinate” nonprofit 501(c)(3) and 501(c)(4) entities. The AAUW Affiliate Agreement is the basic contract between AAUW national and each nonprofit entity that is part of the AAUW nationwide organization. In the application for AAUW’s 2009 national organizational restructure, AAUW was required to submit for IRS approval two versions of the AAUW Affiliate Agreement, one for 501(c)(3) organizations and another for 501(c)(4) organizations. The IRS requires that every single nonprofit entity that is part of the AAUW nationwide organization sign the appropriate AAUW Affiliate Agreement and send it to be permanently housed at AAUW headquarters for random IRS inspection. This is not optional; it is one of the ways that the IRS regulates nonprofit organizations.

Tax Deductibility of Donations

Can people who donate books to a book sale receive a tax deduction?

The IRS regulates what is eligible for a tax deduction. For the donation to be deductible, the book must be donated to an organization that is qualified to receive deductible contributions. For example, if the book sale is raising funds for AAUW, which is a 501(c)(3) organization, the donation is eligible for a tax deduction. If the sale is to raise funds for 501(c)(4) branch, the donation is not eligible for a tax deduction. If proceeds will be split between AAUW and the branch, the branch must tell donors what percentage of their donation will go to each entity and the percentage eligible for a tax deduction.

The donor may only deduct the current fair market value of the book. The receipt does not need to show the value of the book; the donor will make that determination unless the entity has set a fixed price, such as for non-collectible books, in which case donors must be informed of the sale price placed on it by the organization. Likewise, donors must be informed if the organization sets prices categorically; for example, all paperbacks are priced at 50 cents. Receipts for non-cash donations valued at less than $250 should show

  • the name of the charitable organization
  • the date and location of the donation
  • a reasonably detailed description of the item(s). For example, you might write, “10 paperback books published in the 1990s.”

IRS publication 526 is a handy reference guide. See page 7 for rules about contributions of property.

Are dues paid to a 501(c)(4) organization eligible for a tax deduction?

This is governed by IRS regulations. Neither dues nor donations to any 501(c)(4) are eligible for a tax deduction as a charitable donation.

Can I deduct my donation on my federal income tax in the same year I make the donation, even if the charity does not award the scholarship that I helped fund in the same calendar year that I made the donation?

If the charity meets all the IRS charitable donation acceptance requirements, you may deduct the donation in the same year that you made the donation. It is not uncommon for a charity to award a scholarship in a different year than the one in which the scholarship funds were received. For example, since many people make charitable donations on December 31, it is extremely unlikely that a scholarship would be awarded that same day.

Should branches acknowledge the donations they receive? If so, what are the acknowledgment guidelines?

Gift Acknowledgment. Whether or not a donor will receive a tax deduction for a donation, it is good practice to acknowledge each donation in writing. This grateful stewardship will help the donor remember you kindly in the future. When a donation of $10 or more is forwarded to AAUW national, the donor receives an acknowledgment from the Washington, D.C., office.

Gift Documentation. Please be aware that donors cannot take tax deductions for gifts of $250 or more unless they have documentation from the charity that received the gift. Of course, you will probably want to acknowledge smaller gifts as well. For monetary donations, the IRS requires that the acknowledgment include the name of the charity, the amount of the donation, the date of the donation, and a statement that no goods or services were received in exchange for the gift. If goods or services were received, the acknowledgment should state the fair market value of those goods or services and any other amount of the donation that is not tax deductible. It is always appropriate to advise donors to see their tax adviser for specific questions about their personal returns. See page 9 of IRS publication 1771 for examples of acknowledgment language.

Should branches acknowledge donations that are tax deductible?

Good stewardship requires that all donors be thanked for their gifts:

Donations to AAUW. AAUW acknowledges all donations it receives. If donations are collected by the branch and forwarded to the national office, please be sure that the identity of the donor and the amount of the donation can be determined. Sending a completed Contribution Report Form with the donation(s) makes this easy. AAUW acknowledges all contributions of $10 or more by mailing the donor a thank-you letter that can serve as a receipt for tax purposes. The letter also advises donors that they can go online to the Member Services Database to print receipts for all their AAUW giving over the past 24 months. Donors who give less than $10 receive a generic post card thanking them for their gift, which also includes information about printing their receipts for the past 24 months.

Donations to Branches/States. If donations are given to a branch and not forwarded to AAUW national, then the branch should provide some type of written thank-you. Language for these acknowledgments depends on the tax status of the branch. If a branch has 501(c)(4) tax status, then it must not indicate to the donor that the donation is tax deductible. If the branch has a 501(c)(3) tax status, the acknowledgment can state that the donation is taxdeductible, noting specifically any portion that is not tax deductible. For more information about what a 501(c)(3) branch should acknowledge and how, please see IRS publication 1771.

Donation Acknowledgment. In any case, expressing gratitude and appreciation for contributions received is a great activity for any branch. Thanking donors in writing for their gifts is an extra level of stewardship in addition to what they would receive from AAUW national. These recognition pieces do not need to contain any language regarding the tax deductibility of a donation and can simply reinforce how supporting AAUW programs will have a lasting impact on the lives of women and girls.

Is it a problem to raise funds in one calendar year and submit them to AAUW in another calendar year?

It is important to send AAUW contributions collected locally promptly after they are received in order to respect and protect the tax deductibility of the donation. When a donation is held into another calendar year, the donor will receive a written gift acknowledgment showing AAUW’s receipt of the gift in a different tax year than the donor had intended. This can have adverse consequences for the donor’s tax filings, because the IRS permits a tax deduction only in the recorded calendar year of filing. Even if the gift was given earlier, the fact that AAUW did not receive it until the following calendar year makes the donation deductible only in the year in which AAUW received it. This disparity both violates the intent of the donor and may cause the donor to lose the tax benefits planned for that deduction.

For these reasons, donations should be sent promptly to AAUW upon receipt or immediately after a fundraiser to ensure that the donor is recognized and thanked for the donation in the year it was made. This protects the donor’s right to claim the deduction in that year and prevents unintended tax consequences to the donor.

Timing of donations needs to be explained. What is a calendar year versus a fiscal year?

Fiscal Year. AAUW manages its business on fiscal year that begins on July 1 and ends on June 30, similar to many other corporations. We are currently in fiscal year 2013–14, abbreviated to FY2014. On July 1, 2014, we will begin fiscal year 2014–15, abbreviated to FY2015. AAUW business and deadlines, audited financial statements, budgets, 990 forms filed with the IRS, and so on are all based on the AAUW fiscal year.

Calendar Year. The tax deductibility of donations to AAUW is based on the calendar year because that is the requirement of the IRS. So a donation received in December 2013 can only be deducted on your personal federal income tax for 2013. A gift in January 2014 can only be deducted in 2014.

AAUW Donation Acknowledgment “Year.” The IRS considers gifts made in December 2013 and January 2014 to have been made in different calendar years. But since both of those donations were made in the same AAUW fiscal year, 2013–14, and people usually think of their charitable giving based on a calendar year, they are sometimes surprised to see their giving listed in the AAUW Annual Report at a higher or lower amount than they expected. This happens because all annual reports reflect fiscal year giving.

Giving Recognition. Fund pins that are given to individuals in recognition and thanks for their donation to AAUW of $100 or more are based on the calendar year. The Top 10 lists of the most generous branches and states are also based on the calendar year. It is an AAUW tradition to announce and celebrate those Top 10 branches and states from the stage at each National Convention.

If our local 501(c)(4) branch decides to fund someone to attend the National Conference for College Women Student Leaders (NCCWSL) and we choose the recipient, we don’t get a tax deduction. If we send the money to the NCCWSL Scholarship Fund, it is tax deductible. If we donate to the NCCWSL Scholarship Fund, can we choose the recipient?

Selection of Recipients. This is governed by IRS regulations. No, unfortunately, you cannot select the recipient. The IRS does not allow charities to give awards to recipients who are selected by the donors unless they specifically notify the donors that their gifts are NOT tax deductible. But if a branch, state, or individual donates $600 or more to AAUW’s NCCWSL Scholarship Fund, AAUW staff will do their best to match your sponsorship with a recipient from your state.

Tax-Deductible Donations for Scholarship Recipients. AAUW receives applications for NCCWSL scholarships from many women across the country. The applications are reviewed by a committee of AAUW members and people who work in higher education through a process of blind application screening. The committee assigns scores to applications based on noticed criteria including demonstrated financial need, community involvement, diversity, and leadership abilities. A few applicants are removed from consideration either because they do not demonstrate financial need or because they did not complete the application. The committee then informs AAUW staff of the scores, and the staff awards scholarships beginning with applicants with the highest scores.

Number of Scholarships Awarded? The amount of money in the fund determines the number of scholarships that can be awarded. Every year sufficient funds must be raised for the NCCWSL Scholarship Fund in order to fund the increasing number of scholarship applicants. If there are unused funds, they stay in the scholarship fund to be awarded the following year.

Donor Feedback on Scholarship Recipients. Scholarship sponsors receive information about the woman who received their scholarship. These students are amazing women, and many of them have engaged with their sponsors after the conference. Some have even joined their sponsors’ branch or started an AAUW student organization on their campus.

By: