Is it kosher to give money to a charity that my relative benefits from?
February 18, 2016 2:14 PM   Subscribe

I have a relative who benefits from a charitable organization. I have money, but not enough to give the same amount of benefits this organization provides. Is it ok for me to give this charitable organization a donation that I will claim on my taxes?

Additional details and complications:

My employer also gives matching funds for my donations to charitable organizations and can match it.

Neither the charitable organization nor my employer knows that my relative benefits from the charitable organization. My relative does not know I plan to donate to his charitable organization. I think they do good work. I do not want to give the money to my relative directly, and I like to use my company match.

The charitable organization allows donors to suggest I would like the money I donate spent. Are there certain areas that are better than others? Would "general maintenance" be safest? I certainly cannot say, "just spend it on my relative," I assume.

Just trying to avoid running into problems here, and better educate myself on all the issues that might surround such a matter. Thanks!
posted by anonymous to Work & Money (18 answers total) 2 users marked this as a favorite
I am neither a lawyer nor a tax accountant, but there's no way this is a problem. I donate to public radio, claim it on my taxes, and not only do my relatives listen to public radio, but I listen too! Win-Win!

From the way my long-time-fundraiser wife tells it, donors always want their money to do something special and exciting, but it's hard to get people to fund the boring stuff like light bulbs and paper towels. My sense is that they don't need your advice about how to spend it; they're accepting your advice because doing so makes your gift more likely.
posted by jon1270 at 2:25 PM on February 18, 2016 [3 favorites]

I see no ethical issues. Hell, I've probably used workplace matching funds to give money to charities from which I have personally benefited, if you count things like performance spaces where I see concerts and museums that I go to and whatnot. Unless your workplace stipulates limits, and I doubt they do, then I wouldn't worry about it. I promise you that there are probably people who are donating money to the schools their kids attend.

I generally don't stipulate how money gets used, because I figure that if I trust an organization enough to give them my money, I should trust them enough to identify their most pressing needs. On the other hand, if there's a program that you particularly value, it's fine to direct the funds towards that. You can't say that you want your relative to benefit, but if your relative is using the day program for seniors, then you can say that you want to fund the day program for seniors.
posted by ArbitraryAndCapricious at 2:26 PM on February 18, 2016 [2 favorites]

You are 100% in the clear to give money to an organization that your relative benefits from. And claim it on your taxes, and get your company to match it. Every organization that I've worked for vastly prefers an "unrestricted" donation so that they can spend it where it is needed most. I've worked in the non-profit fundraising for 15 years. I regularly contribute to the organizations for which I work (and that pay my salary), and I deduct that from my taxes.
posted by kimdog at 2:26 PM on February 18, 2016 [5 favorites]

People take tax deductions when they donate to their church, even if a particular church largely spends its charitable donations on its congregation as if it were a private members' club. This isn't a ethical question in the USA -- it's all down to an organisation's status with the IRS.
posted by holgate at 2:27 PM on February 18, 2016 [3 favorites]

All of the above. See "Contributions From Which You Benefit" in IRS Pub 526. I don't know the rules for a benefit to a third party, like your relative, but you are completely in the clear if your relative would receive the same services and benefits regardless of whether you donated.
posted by Mr.Know-it-some at 2:40 PM on February 18, 2016 [1 favorite]

There are zero issues here. This is how probably 70% of charities build their 1st tier donors: these donors are directly affiliated to people the charity serves, be they people diagnosed with a particular disease, people who have lost loved ones to suicide, family of veterans, etc.

The two charities I work with most closely benefit enormously from Apple's matching Benevity fund and I know many of those donors are directly connected to populations we serve.
posted by DarlingBri at 2:49 PM on February 18, 2016 [4 favorites]

As a nonprofit person who has fundraising as part of my purview, this is not a problem. However, I would agree that unless you are making a really big gift (as in, upwards of $10,000) you should not specify a particular use for your funds. And even then, there's an argument to be made for unrestricted funds. The absolute best thing you can do for a charity you respect and trust is to give them unrestricted funds so that they can use their best judgment about how they are spent.
posted by lunasol at 2:52 PM on February 18, 2016 [1 favorite]

People donate to their kids schools and get employee matches all the time.
posted by k8t at 2:56 PM on February 18, 2016 [3 favorites]

^This. My daughter attends a private nonprofit school on a scholarship provided by donations, mostly of parents of students who go there.
posted by celtalitha at 2:59 PM on February 18, 2016 [3 favorites]

Your employer may have matching restrictions; mine did. The stipulation was that you or a close relative must not work for or benefit from to match the donation. This applied to, for example, grant distributing charities, not, say, NPR.
posted by tilde at 3:39 PM on February 18, 2016 [1 favorite]

Would "general maintenance" be safest?

this is "unrestricted funds" and charities love it.
posted by poffin boffin at 3:44 PM on February 18, 2016

No issues ethically, tax wise or accounting wise. Money is fungible. If you give say $100 to the maintenance department, the budget can or will move $100 from other internal funds to a different use. Unless all their funds come from earmarked donations, give it to whatever area makes you feel better about having given.
posted by AugustWest at 4:05 PM on February 18, 2016

Money is fungible. If you give say $100 to the maintenance department, the budget can or will move $100 from other internal funds to a different use.

FWIW, this is only true to a point for charities. If they get too many ear-marked donations and not enough that allow them to run the general operations of their organization, they can end up in trouble.
posted by jacquilynne at 4:15 PM on February 18, 2016

As someone who's overseen the budget of a small charity for over 10 years, no, the money isn't fungible - we really try to honor our donors' wishes and if no one gives to support a particular program and we otherwise only have enough funding to meet our set expenses, we'll put the program without funding on hiatus for a short time until we can raise more. If you truly don't want to support the other things the charity does, that's different, but since you say the charity does good work, please give "to wherever most needed".
posted by treehorn+bunny at 4:46 PM on February 18, 2016 [2 favorites]

Also, yes: unrestricted fund is best. That is not saying "hey, go out for lunch with my money." It is saying "hey you know that program cheque you mail out to people in need? Go ahead and go wild and buy a stamp for it!"
posted by DarlingBri at 5:53 PM on February 18, 2016

Think of it this way if it helps: If you were to not donate, it would be (ever so slightly) more difficult for the organization to provide benefits to not only your relative, but everyone else they help. There's no ethical issues here.

In the non-profit I work for, I benefit from them providing me a job, benefits, stability, and other perks. I provide substantial contributions back to the organization through various avenues. This is not only me helping out those people we serve, but also me thanking the organization for my success.

Also, as mentioned above, a substantial part of our funding and other donor activity originates with friends and family of our primary beneficiaries, or they themselves.

Don't donate because of any pressure you feel here, but don't let your relationship be a reason not to. Nthing the 'where it is needed most' option as well.

Silly comparison: In MN, nearly all of our hospitals are non-profits. After they provide you benefits, they'll come directly to you looking for 'donations' when you get out, and actually get mad at you (and sometimes your family) when you don't 'donate'.
posted by SquidLips at 6:06 PM on February 18, 2016

This is fine. We donate money to the church that employs my husband; this is not something the IRS cares about.
posted by ThePinkSuperhero at 6:29 PM on February 18, 2016

It's perfectly fine, in fact that's the whole idea behind charitable giving. You schmooze people into it.
posted by Ruthless Bunny at 4:51 AM on February 19, 2016

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