Galas and Tax Considerations

If you would like to support the Historic New England Medal Gala by sponsoring or buying individual tickets, there are tax implications to consider when deciding how to fulfill these gifts.

The IRS has ruled that donor advised funds and private foundations cannot pay for any portion of a gala dinner ticket, which for the Historic New England Medal Gala is $1,000, due to the personal benefit received by the donor in exchange for the contribution. Please consult your financial or legal advisor for definitive guidance.

Here are a few of examples of how the new IRS guidelines may affect your gala giving decisions:

Jane would like to become a $25,000 Friend sponsor and cannot attend, so she won’t be using any of her dinner tickets.

• Jane can use her personal assets, e.g., cash or appreciated stock, donor advised fund and foundation to pay the $25,000 donation as the gift is fully tax-deductible.

Jane would like to become a $6,000 Friend sponsor and will use two tickets to attend the dinner.

• If Jane pays the $6,000 for her sponsorship from her personal assets, then $5,500 will be tax-deductible. The remaining $500 reflects the value of the two dinner tickets.
• Jane can use her donor advised fund and foundation to pay the $4,000 donation portion as this amount is considered fully tax-deductible with no goods or services being provided, and then pay $2,000 for the two tickets from her personal assets.

Jane would like to become a $6,000 Friend sponsor and would like to use all six tickets provided as a benefit of sponsoring.

• If Jane pays the $6,000 for her sponsorship from her personal assets, then $4,500 will be tax-deductible. The remaining $1,500 reflects the value of the six dinner tickets.
• As six individual tickets would cost $6,000, Jane cannot use her donor advised fund or foundation.

Jane would like to buy two tickets for a total of $2,000.

• If Jane pays the $2,000 for her sponsorship from her personal assets, then $1,500 will be tax-deductible. The remaining $500 reflects the value of the two dinner tickets.
• Jane cannot use her donor advised fund or foundation to buy tickets. The IRS does not allow any portion of a gala ticket to be made through a charitable foundation or donor-advised fund.

You may find these following links helpful.

Fidelity Charitable provides guidance on this topic titled, “Can I recommend a grant from my Giving Account for a charitable gala or fundraising event?”

The IRS has shared information regarding bifurcated payments for tickets or event attendance from donor advised funds in IRS Notice 2017-73. The information focused on this topic starts on page 5.

For additional information, please contact the Development Office at 617-994-5951 or [email protected].