Best Practice for Accepting Gifts & Giving Tax Deduction

Stacey Brake

I'm looking to see how others handle this type of situation:


We have a staff member who's friend gave him $100 to give to us as a donation. The staff member wants to make the donation on his own personal credit card on behalf of the original donor. The staff member wants the original donor to receive the hard credit as well as the tax deduction letter.


My understanding of IRS rules and auditing practices is this:


The donor is the one whose name is on the check or the credit card. They are the ones that receive the hard credit and the tax deduction letter.


How I am suggesting this scenario be handled is:


I give the staff member the hard credit (no letter will be given and the detail will be notated in the gift notes). The original donor will receive a soft-credit (with detail notated in the gift notes) and a nice thank you letter sent without the tax deduction information. It seems that this would fulfill the IRS rules as well as provide a proper audit trail. How does everyone else handle these situations? Thank you in advance!

Dariel Dixon

There's no question about who will get the hard credit here. The only question is if a soft credit is in order. It can be argued either way if a soft credit should be given under this circumstance. Personally, I would not send a letter to the friend at all, unless you have a paper trail that says that the funds originated with them.


This is a teachable moment for the staff member. They need to be educated on the way that the rules work. Just because they want their friend to get the hard credit doesn't mean that you can legally do so.

Patti Hommes

We've had similar situations and it drives me crazy! We get a check or cc donation from John Doe "on behalf of" Susie Smith, with a request that Susie get a tax deduction letter. I hard credit John Doe and put the "on behalf of" info in the gift reference. For the requested letter to Susie, I send our general "thank you for your generous support, etc., etc., etc." but no $ amount.

JoAnn Strommen

'Clap' and 'like' don't seem sufficient for Dariel Dixon‍ and Patti Hommes‍. And to you Stacey Brake‍ for correctly understanding IRS rules.


Slippery slope for the staff person as they may also be receiving personal benefits for making the charge on their card. Probably not much 'reward' for $100 but certainly would if repeated or for larger amount.


I would say "no" if staff member has the cash. Have him submit the cash and take his word for it that it's from friend and receipt friend.

Patti Hommes

JoAnn Strommen:

'Clap' and 'like' don't seem sufficient for Dariel Dixon‍ and Patti Hommes‍. And to you Stacey Brake‍ for correctly understanding IRS rules.


Slippery slope for the staff person as they may also be receiving personal benefits for making the charge on their card. Probably not much 'reward' for $100 but certainly would if repeated or for larger amount.


I would say "no" if staff member has the cash. Have him submit the cash and take his word for it that it's from friend and receipt friend.

Thanks! JoAnn!