How has the athletic seating deduction rule worked before this year?
Historically donors have not been able to deduct donations for athletic seats because they receive a benefit in return for the donation. Many colleges and universities adhered to the 80/20 principle, which only applied to athletic seating and treats 80% of the seat price as a charitable donation. This is important because this amount is also counted in fundraising totals and annual projections.
What happened when the tax law changed this year?
On January 1, 2018, the new tax laws took effect and reinterpreted this rule stating that 0% of an athletic seat donation is tax-deductible. Despite much debate, the general consensus was that no portion of these gifts would be deductible and thus could not be counted in fundraising totals.
What’s the current status of this law?
In July, the CASE Board of Trustees ruled that institutions may continue to count 80% of athletic seat purchases as charitable donations and also count them in fundraising totals for CASE surveys, such as the VSE. This is despite the fact that the donations are still not tax-deductible for donors.
What should you do?
- Review your institution’s current counting procedures to understand how donations related to athletic seat purchases are being counted in fundraising totals.
- Review your institution’s gift counting policy, update it to reflect these new regulations, and state how your institution intends to count athletic seat purchases.
- Ensure that your operations team, especially team members who produce reports and metrics, are educated on the new regulation so that transactions are coded accurately and institutional giving totals are appropriately reflected.
- Communicate to donors that the 2018 Tax Cuts and Jobs Act impacts the way donations can be deducted. As always, donors should be instructed to consult a tax professional for information on how donations may be deducted.
- Review receipts and acknowledgment communications related to athletic seating to ensure accurate verbiage is utilized and donors receive proper instructions regarding these donations.