can blm accept donations?
“This unfortunate scenario demonstrates the importance of donor diligence,” said Yael Fuchs, president of the National Association of State Charity Officials. She added, “Many online platforms only require that entities raising money prove that they have 501(c)(3) tax exempt status, but having (c)(3) status does not mean that the organization is legitimate or well run.”
Before you click on that donate button, here’s how to avoid sending your money to the wrong group.
Donors sent money to the Black Lives Matter Foundation through employee-matching donation programs at their jobs and through third-party fundraising platforms including GoFundMe and the PayPal Giving Fund. This happened because the foundation showed up when users searched those platforms for “Black Lives Matter.”
But as its founder explained to BuzzFeed, despite the similar names, the Black Lives Matter Foundation has no affiliation with the Black Lives Matter social justice movement founded in 2013 by three community organizers. (The movement is not a tax-exempt nonprofit, so it accepts donations through a fiscal sponsor called Thousand Currents.)
Employees at Apple AAPL, +0.34%, Google GOOG, +0.42%, Microsoft MSFT, +0.70% and Dropbox DBX, +1.61% tried to send donations to the Black Lives Matter Foundation through gift-matching programs run by Benevity, a company that manages employee giving and other social responsibility functions for companies, including MarketWatch’s parent company, News Corp NWSA, -0.05%.
None of the money those employees donated to the Black Lives Matter Foundation actually ended up with the foundation, according to Apple, Google, and Microsoft. (Dropbox did not respond to a request for comment.) All told, employees at about 200 of Benevity’s 650 client companies donated to the Black Lives Matter Foundation through its platform, said Benevity founder and executive chair, Bryan de Lottinville.
After discovering that donors were sending money to a group that wasn’t affiliated with the Black Lives Matter movement, and after further investigation revealed that the foundation was not in good standing with state authorities in California, where it is based, Benevity did not release any of the donations to the foundation, de Lottinville told MarketWatch. (Benevity has since “deactivated” the foundation on its platform and added a note to its profile explaining that the foundation is not related to the movement.)
Other donations to the Black Lives Matter Foundation were made by individuals who gave money to fundraisers on GoFundMe. Users launched 180 campaigns that raised some $350,000 for the Black Lives Matter Foundation, a GoFundMe spokesman said. GoFundMe listed the foundation on its platform because it was in a database operated by its partner, the PayPal PYPL, -0.97% Giving Fund. GoFundMe and PayPal are working to redirect the donations, spokespeople for the companies said.
There have been attempts to trademark the phrase “Black Lives Matter,” but no one owns it, which means it can end up in the hands of people who aren’t affiliated with the official group, a decentralized global movement with 22 chapters across the country.
The Black Lives Matter Foundation doesn’t appear to have been intentionally deceiving anyone. The foundation was established as a legitimate nonprofit by a Black man who told BuzzFeed his wife’s ex-husband was allegedly killed by the police. The founder also noted that his goals differ from the movement’s goals. His group’s mission is to unify the police and the community, while the movement advocates for defunding the police. (The foundation’s founder could not be reached for comment.)
In the corporate world, one company wouldn’t be able to incorporate using another’s name, de Lottinville noted. But social movements — like MeToo, for example — often have no defined ownership.
“Many social justice organizations choose not to incorporate or otherwise adopt more traditional leadership structures,” said Fuchs, who is also co-chief of the New York State Office of the Attorney General’s charities bureau enforcement section. “We understand the desire to run a movement in an innovative, non-hierarchical way, but this does leave the door open for fraudsters or other opportunists to claim popular names and may limit protections that are available to the legitimate entity.”
Scammers often use sound-alike names to get donors to open their wallets. Dozens of fake charities were busted in 2018 after using names similar to legitimate groups helping military veterans. Similar frauds have happened with cancer charities.
One tip for steering clear of name confusion: Find out a charity’s EIN (employer identification number) before you donate. No two charities have the same one, and donors can use the number to verify whether a charity is legit.
If you want your donation to be tax deductible, the group you’re giving to has to be a registered 501(c)(3) nonprofit with the IRS. You can check the IRS website to make sure a nonprofit is in good standing. But donors should also check with authorities in the state where the charity is based. Most state attorneys general have easily searchable databases where donors can check a charity’s status. If you don’t know who your state charity regulator is, you can find it on the National Association of State Charity Officials site.
If donors to the Black Lives Matter Foundation had typed its name into the California Attorney General’s charity verification tool, they would have seen that state authorities had issued a cease and desist letter to the foundation because it had not registered with the attorney general’s office, yet was soliciting donations, said Tania Ibanez, senior assistant attorney general in charge of the charitable trust section of the California Attorney General’s Office.
There is pending legislation in the California State Assembly that would require third-party platforms like GoFundMe, PayPal, and Benevity to vet the status of charities in California before listing them on their platforms, Ibanez noted.
When donors come across a charity on a third-party fundraising platform or on a friend’s social media feed, where it’s common for people to ask for donations in lieu of birthday presents, it’s easy to quickly click donate, especially when it’s a cause that’s been in the news lately.
Third-party fundraising platforms like Benevity, GoFundMe or PayPal Giving Fund typically have blurbs describing the charities that are listed on their sites. But before deciding whether to donate, donors should hit pause and visit the charity’s own website. (The Black Lives Matter Foundation, for example, doesn’t have its own website.)
“My general counsel would be to slow down and take time to look at a website — and the mission statement in particular — and, if possible, check the list of donors on the website,” said Phil Buchanan, president of the Center for Effective Philanthropy and author of “Giving Done Right: Effective Philanthropy and Making Every Dollar Count.” A charity’s website should clearly explain its mission and accomplishments. You can also look to see who is on the group’s board of directors. “Make sure it all makes sense,” Buchanan said.
After you check out a charity’s website yourself, also check its rating on sites such as BBB Wise Giving Alliance, Candid (formerly Guidestar), CharityNavigator, CharityWatch, Givewell, or GreatNonprofits.
However, even rating sites don’t always give a complete picture. The Black Lives Matter Foundation was listed on CharityNavigator, for example. because it was a registered 501(c)(3) organization, but the foundation had no rating, a CharityNavigator spokesman noted. CharityNavigator has now updated the entry with a “moderate concern” advisory.
There’s no national database of complaints against charities. But donors can do a little digging by Googling the group’s name with words like “fraud,” “lawsuits,” or “complaints” to see if any news stories come up. Don’t forget to click past the first page of results.
See also:Some of America’s biggest employers don’t match employee donations to charity
A nonprofit should be able to say what it does with donations. If it can’t, that’s a red flag.
“The nonprofit should also provide visibility into how the nonprofit operates,” said Kevin Scally, spokesman for Charity Navigator. “Are they an advocacy organization? Do they provide direct services? Do donations fund research? Legitimate organizations should make the answer to these questions very clear.”
Donors can see details of how an organization spends money — including salaries for executive directors — on Form 990s, which all nonprofits are required to file. Legitimate 501(c)(3) charities should file a Form 990 with the Internal Revenue Service annually, Scally noted. “If they have not done so, for example, if the organization was something recently formed and you are having difficulty finding information on it, err on the side of caution,” he said.
Third-party platforms make donating to charities easier than ever. They function as online directories where people can quickly look up causes they’re interested in supporting. They’re fast and convenient, and help get exposure for charities that may not have big marketing budgets.
But because third-party platforms are essentially middlemen between donors and their money, there are caveats. Some of these platforms charge nonprofits fees to appear on their sites. Platforms have been known to go out of business, leaving donations undistributed to charities. Sometimes there’s a delay between when a donor makes a donation and the nonprofit receives that money.
Generally when donors give money to a charity through these platforms, their donation doesn’t go directly to the charity. Typically it first goes to a 501(c)(3) nonprofit that’s run by the platform, which then gives the money to the charity.
That loss of control comes with pros and cons. The buffer between donor and charity worked well in this case, said Benevity’s de Lottinville, because it prevented money from ending up with the wrong group. Benevity only lists charities that are in good standing with the IRS, and before it distributes funds to charities, it does another round of vetting.
During that round, Benevity discovered the California cease and desist letter, de Lottinville said, and also realized that the Black Lives Matter Foundation wasn’t affiliated with the movement. “It’s unfortunate, but this is exactly what we’re set up to do, is help protect our corporate client and our donors,” he told MarketWatch.
Likewise, GoFundMe donors are protected by a guarantee that their money will go to the intended recipients and allows for refunds in some cases. Donors to the PayPal Giving Fund are advised that if their donation can’t be sent to their chosen charity, PayPal will “reassign” the funds and “whenever possible will consult with you on the reassignment.”
Social media posts falsely claim donations made on the Black Lives Matter website go “directly” to the Democratic Party, because the group uses ActBlue Charities — an online fundraising platform. Donations go to the Black Lives Matter Global Network Foundation. The funds first pass through a nonprofit that sponsors the group.
As the Black Lives Matter movement captures national attention, websites and social media posts are spreading a false claim about donations made to a leading Black Lives Matter organization.
An Instagram page for the website WokeHub.com claimed, for example, that “donations made to Black Lives Matter website go directly to the DNC” and that BlackLivesMatter.com “appears to be an international money laundering program used by the Democratic National Committee.” A similar claim appeared on the conspiracy theory website InfoWars.com.
Conservative personality Candace Owens also put the claim before her more than 1 million followers on Instagram, where she claimed “BLACK LIVES MATTER FUNDING GOES DIRECTLY TO WHITE DEMOCRATS AND THEIR VARIOUS INITIATIVES TO GET DEMOCRATS INTO OFFICE.”
But the claims — perhaps worsened by public confusion over the structure of the organization, which we’ll explain later — are based on a distortion of facts regarding the nonprofit ActBlue, which provides fundraising infrastructure to Democratic campaigns and progressive organizations.
There are a number of groups that use the phrase “Black Lives Matter” in their name. There is a “Black Lives Matter Foundation,” for example, whose president confirmed to us that it is not related to the organization behind BlackLivesMatter.com — which is at the center of the viral claims.
BlackLivesMatter.com is operated by an umbrella Black Lives Matter organization called the Black Lives Matter Global Network. The effort started in 2013 following the acquittal of George Zimmerman in the killing of Trayvon Martin.
To collect donations, the website uses ActBlue Charities, a 501(c)(3) organization that specifically makes the platform available to charitable organizations.
Owens’ Instagram post features a video showing that BlackLivesMatter.com uses ActBlue for its donations. It then shows an OpenSecrets.org breakdown of expenditures by ActBlue made in the 2020 cycle; the top recipients are the presidential campaigns of Sen. Bernie Sanders, former Vice President Joe Biden, and Sen. Elizabeth Warren.
But the video misrepresents how ActBlue works. ActBlue isn’t itself donating money. It’s just the online platform that campaigns and groups use to solicit and collect donations.
Campaign finance experts told us that it’s false to say that donations to the Black Lives Matter group are going to the Democratic National Committee, or to Democratic presidential campaigns, simply because the website uses ActBlue.
“ActBlue lets candidates and liberal nonprofit organizations set up their separate accounts,” Michael Malbin, director of the nonpartisan Campaign Finance Institute, told us in a phone interview. “There’s no crossing from one account to another. If you give the money to Sanders, it does not go to Biden.”
Malbin — a professor of political science at the University at Albany, State University of New York — said candidates and organizations use ActBlue “for the ease of transactions.”
“ActBlue has no discretion over” where to direct individuals’ contributions, he said. The money “you see coming through ActBlue is coming through it, not from it.”
A similar platform used for Republican fundraising efforts, WinRed, launched in 2019.
“When you donate on an ActBlue or ActBlue Charities page, the donation is earmarked for the group listed on the form,” Caleb Cade, a spokesperson for ActBlue, told us in an email. “We pass along the contribution directly to the receiving campaign or entity. We do not choose the recipient of the contribution, the donor does.”
In a statement to FactCheck.org, the Black Lives Matter Global Network’s managing director, Kailee Scales, said that the claims about the money being routed to Democrats are part of “an organized disinformation campaign against BLM, from actors clearly trying to blunt the growing support for this movement.”
“All contributions to the DNC are publicly reported to the FEC and review of FEC reports will confirm there has never been any donation from this organization,” she said.
The claims seem to have flourished amid confusion over the structure of the Black Lives Matter Global Network, which is incorporated in Delaware.
The ActBlue donations page on the website specifically says that the money given will “benefit Black Lives Matter Global Network.”
Technically, the network also has structured a foundation — the Black Lives Matter Global Network Foundation — which is “fiscally sponsored” by a global nonprofit called Thousand Currents, according to Jenesha de Rivera, director of finance and administration at Thousand Currents.
The partnership between the network and the nonprofit (formerly the International Development Exchange) was announced in 2016. The nonprofit organization said it would provide “fiduciary oversight, financial management, and other administrative services to BLM.”
Cade, the ActBlue spokesperson, confirmed that the donations made through ActBlue go to Thousand Currents for Black Lives Matter.
Fiscal sponsorships are common.
“Using a fiscal sponsorship arrangement offers a way for a cause to attract donors even when it is not yet recognized as tax-exempt under Internal Revenue Code Section 501(c)(3),” according to the National Council on Nonprofits. “In essence the fiscal sponsor serves as the administrative ‘home’ of the cause. Charitable contributions are given to the fiscal sponsor, which then grants them to support the cause.”
Black Lives Matter Global Network Foundation “is an organization within Thousand Currents,” de Rivera said in a phone interview, “so it can accomplish its charitable purpose prior to receiving its approval from the IRS for its own 501(c)(3).”
De Rivera said the foundation has applied to become its own 501(c)(3). We asked the Black Lives Matter group for a copy of its Form 1023, which is used to apply for that designation, but didn’t hear back. An IRS spokesperson said copies are only publicly available if the organization is approved for 501(c)(3) status.
On the claims that money is being given to Democratic campaigns, de Rivera said that Thousand Currents’ own 501(c)(3) status would be “in jeopardy” if charitable donations made through the organization were rerouted to political campaigns.
According to the IRS, “all section 501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office. Contributions to political campaign funds or public statements of position (verbal or written) made on behalf of the organization in favor of or in opposition to any candidate for public office clearly violate the prohibition against political campaign activity.”
A Thousand Currents audit for 2019 shows that, as of June 2019, the organization held nearly $3.4 million in net assets for Black Lives Matter. It had released nearly $1.8 million to the group in the last fiscal year.
The audit also provides a breakdown of how the foundation (referred to as the “fiscal project” under a statement of functional expenses, according to de Rivera) spent that $1.8 million in buckets — including on consultants and salaries.
Speaking generally about the issue of fiscal sponsorships, Benjamin Leff, a law professor at American University who specializes in the regulation of nonprofits, told us by phone that “the sponsoring organization is responsible” for ensuring “that the sponsored organization spends the money in a way that is consistent with the law.” He said the sponsored organization does not have to file its own Forms 990.
And, Leff said in an email, because ActBlue Charities is also a 501(c)(3), it is his “understanding … that both ActBlue Charities and Thousand Currents have a legal obligation to make reasonable efforts to ensure that the funds they receive are spent consistent with 501(c)(3) restrictions.”
On June 11, the Black Lives Matter Global Network Foundation said in a press release that, thanks to donations, it would make $6.5 million available through grants that will be available to “all chapters affiliated” with it.
Editor’s note: FactCheck.org is one of several organizations working with Facebook to debunk misinformation shared on social media. Our previous stories can be found here.
“ActBlue Expenditures.” OpenSecrets.gov. Accessed 11 Jun 2020.
Cade, Caleb. Spokesperson, ActBlue. Email to FactCheck.org. 11 Jun 2020.
De Rivera, Jenesha. Director of finance and administration, Thousand Currents. Phone interview with FactCheck.org. 12 Jun 2020.
“Fiscal Sponsorship for Nonprofits.” National Council of Nonprofits. Accessed 11 Jun 2020.
“IDEX and Black Lives Matter announce global partnership.” Thousand Currents. 6 Sep 2016.
Leff, Benjamin. Law professor, American University. Phone interview with FactCheck.org. 12 Jun 2020.
Malbin, Michael. Director, Campaign Finance Institute. Phone interview with FactCheck.org. 11 Jun 2020.
Pappas, Alex. “WinRed, new GOP donor platform, reaps impeachment windfall, rakes in millions since probe launch.” Fox News. 1 Oct 2019.
Persily, Nathaniel. Law professor, Stanford University. Email to FactCheck.org. 11 Jun 2020.
“The Restriction of Political Campaign Intervention by Section 501(c)(3) Tax-Exempt Organizations.” IRS. Accessed 12 Jun 2020.
Black Lives Matter’s national organization doled out just over $30 million — 33% of the nearly $90 million it received in public donations from 2020 to 2022 — to charitable foundations, public filings show.
Black Lives Matter Global Network Foundation, an Oakland, California-based non-profit, gave away the $30,498,722 in grants to black, trans and anti-police non-profits in the fiscal years for 2020 and 2021, according to two federal filings which cover the periods from July 1 2020 to June 30, 2022.
That total includes the $4.5 million the group doled out last year to non-profits run by the movement’s own supporters and friends — even as BLMGNF registered losses of more than $8.5 million last year, its latest public filings for the fiscal year 2021 show.
The group also gave a grant to one of its harshest former critics, paying out $400,000 to the Tamir Rice Foundation.
BLMGNF handed out millions of dollars to supporters of its co-founder Patrisse Cullors, who resigned from the group in 2021. The Post revealed Friday that her lucrative TV deal with Warner Bros. had ended without producing any shows.
Among those taken care of by BLMGNF is Cullors’ brother, Paul Cullors. The self-taught graffiti artist took home $139,708, making him one of only two members of the seven-person board to receive a salary from BLMGNF, according to filings. The other payee was Kailee Scales, the group’s former managing director, who received a payout of $114,625. Scales left the organization in 2020, according to her LinkedIn profile.
Paul Cullors’ company, Black Ties Security, LLC was one of the group’s highest paid contractors, earning $756,330 in 2021 in “security services.”
The security company, which is run out of a UPS store in Mission Hills, California, is close to Paul Cullors’ home.
He purchased the three-bedroom house in the Los Angeles suburbs in February 2021 for $637,006, according to public records.
In 2020, the previous fiscal year, filings show BLMGNF paid another company controlled by Paul Cullors — Cullors Security LLC — $840,993.
That company, which is still active, was registered with the address of his Mission Hills home, according to public records.
BLM’s national group also gave a $400,000 grant to the Tamir Rice Foundation, which was set up by Samaria Rice, the mother of the 12-year-old African American boy who was killed by a white policeman in 2014 while playing with a toy gun.
Rice, who started her foundation in 2018 to conduct after school arts programs for at-risk children, had been a vehement critic of Cullors and BLM.
She claimed that the group did not support mothers of black children who had been killed in police violence and pointed the finger at Cullors, blaming her for the disarray in the organization.
“They are benefiting off the blood of our loved ones, and they won’t even talk to us,” Rice told The Post in 2021.
“The ‘activists’ have events in our cities and have not given us anything substantial for using our loved ones’ images and names on their flyers,” Rice said in a 2021 joint statement with Lisa Simpson, the mother of Richard Risher, who was killed by LAPD officers in 2016.
Rice declined to speak with The Post this week.
BLMGNF’s biggest grant of $1,269,368 last year went to the Love Not Blood Campaign, which was set up by Cephus “Uncle Bobby X” Johnson in memory of his nephew Oscar Grant, a black drug dealer, who was gunned down by a white transit cop in Oakland in 2009.
Johnson is a longtime activist and member of Black Lives Matter, who has worked closely with Cullors over the years. Grant’s death inspired the award-winning film “Fruitvale Station.”
Johnson has said he started the charity in 2010 although he did not apply for charitable status from the IRS until 2019, records show. In 2020, Love Not Blood recorded receiving less than $50,000 in contributions.
LGBTQ causes championed by Cullors were also rewarded by BLMGNF in its most recent disclosure. Cullors, who identifies as queer, married black Canadian activist Janaya Khan, who identifies as queer and non-conforming.
BLMGNF gave out $200,000 to the Trans Justice Housing Project in Atlanta, which helps trans people find housing.
It gave the same amount to Reuniting of African Descendants, a New York-based “black, trans-led grassroots initiative to end genocide against trans and queer people of African descendants” even though the group’s non-profit status had been revoked.
BLMGNF sent the money to Nala Simone Toussaint, a cosmetologist and co-founder of the group who had initially set up a limited liability corporation, which was dissolved last month, public records show. LLCs are allowed to accept donations provided they register with the IRS.
Last year, Toussaint registered Reuniting of African Descendants as a separate non-profit, according to the New York State’s Department of State website.
BLGNF also gave grants to charities honoring other young black men killed by police. It donated $297,000 to the Michael Brown Chosen for Change Foundation, which had its non-profit status revoked for failure to file returns in 2018, public records show.
The group was set up in 2015 in honor of Michael Brown, an 18-year-old black man who was killed by a white police officer in Ferguson, Missouri, in August 2014.
His death led to the wave of protests that fueled Black Lives Matter.
The Michael Brown Foundation Chosen for Change Foundation was set up by Janie Jones, a black Washington-based mediator who was a spokeswoman for Brown’s father, Michael Brown Sr, and stepmother, Cal Brown.
Another Michael Brown charity — Michael OD Brown We Love Our Sons and Daughters Foundation — set up by his mother Lesley McSpadden took in $89,303 from BLMGNF, filings show.
BLMGNF saw contributions tank in the 2021 fiscal year, from $76,872,002 in the previous year to $9,268,283. (It recorded total revenues, which include investment income of $79,644,823 in 2020 and $8,489,062 in 2021, for a total of $88,133,885.)
“These latest revelations in audited financials and 990s prove the chaos we cited in our complaint with the IRS,” said Tom Anderson, director of the Government Integrity Project at the National Legal and Policy Center, an ethics watchdog group.
The group filed a complaint against BLMGNF with the IRS last year for allegedly violating IRS rules prohibiting the use of nonprofit assets for private benefit, self-dealing, conflicts of interest and unlawful political fundraising,
The Washington Free Beacon, which first reported on the disclosures, observed that the foundation had “blown through two-thirds of the $90 million it raised in the wake of George Floyd’s death in the summer of 2020.”
Over the last two reporting periods, the group recorded a total of $22,704,829 in expenses, which included legal fees, rent and office costs. It paid $969,459 paid to Trap Heals LLC, a company run by Damon Turner, the father of Cullors’ child, in 2021.
More than $2.1 million was paid to Bowers Consulting, a company run by current BLMGNF board member Shalomyah Bowers, according to 2021 federal filings. Bowers’ firm received a further $34,800 in fundraising expenses, according to the latest IRS filing.
Some $12 million was spent on luxury homes in Los Angeles and Toronto, which the group said it would use for office space and special events.
It suffered a $961,000 loss on a securities sale of $172,000, and paid out $600,000 to an unidentified former board member’s consulting firm “in connection with a contract dispute,” according to the non-profit’s audited financial statements.
Cullors resigned from the leadership of BLMGNF a month following The Post’s exposé of her $3.2 million real estate buying spree in 2021.
At the time, Cullors claimed that she did not use any movement cash to buy the properties in Los Angeles and in the Atlanta suburbs.
She has since sold the Georgia property, which included an airplane hangar and a shared runway, public records show. In 2021, she spent $1.4 million on a home in tony Topanga Canyon in Los Angeles, according to reports.
St. Elmo Village in Los Angeles, an historic artists’ housing compound where Cullors was living when she and others began the movement, received $200,000 from BLMGNF, filings show.
Cullors met with dozens of organizers in the courtyard of the village, which was built on the site of actress Mary Pickford’s estate, to hammer out the details of the movement in the summer of 2013, according to reports.
The Oakland-based Anti Police-Terror Project, which has hosted protests over the last several years to defund the Oakland Police Department, received $200,000 from BLMGNF, according to its filings. “Until we can abolish the police, we’re pushing for effective police oversight in Oakland,” the group says on its website.
In addition to its grants, BLMGNF spent $1.1 million on a Dayton, Ohio-based company run by the sister of one of its former board members. The cash paid to New Impact Partners was for “consulting services.”
The company is run by Danielle Edwards, the sister of Raymond Howard, according to public filings.
As a government agency, the Bureau of Land Management does not solicit donations. However, those wanting to support their public lands can do so through monetary donations to a specific BLM office or to a BLM partner or friend's group that helps further BLM's programs and mission.
Local governments in Washington State are allowed to receive donations. For example, RCW 35.21.100 states:
While there is not a similar statutory provision for counties, counties nonetheless have inherent authority to accept donations.
In general, special purpose districts may also accept gifts (see, for example, RCW 70.44.060(1), which authorizes public hospital districts to accept donations). However, the manner in which special purpose districts can receive these donations may differ (For example, the board of commissioners for ports must approve donations of real and personal property, per RCW 53.08.110).
Receiving gifts raises a host of issues, most commonly policies and procedures, reporting, and how to manage gifts with requirements. Let’s look at each.
One common question is whether or not donations to a local government are tax deductible. The IRS Code at 26 U.S.C. §170(c)(1) states that a donation is tax deductible when it is to:
Note that the donation is to be for “public purposes,” so it should not be intended to benefit a particular individual or group.
Additionally, the IRS requires certain documentation of the donation, as explained in Publication 1771, Charitable Contributions – Substantiation and Disclosure Requirements. As noted on page four, if a donor wishes to claim a tax deduction for a donation to a local government that exceeds $250, the donor must obtain a written acknowledgment from the local government that contains the following:
However, it is not necessary to include either the donor’s Social Security number or tax identification number on the written acknowledgement.
A best practice is for local governments to develop a donation acceptance policy and include any limitations on donations. The City of Lakewood accepts donations as follows:
If the donation has no restrictions attached to the gift, it may be used for any municipal purpose. However, some cash donations, such as a bequest, may come with requirements on how the funds may be spent.
If a local government accepts a donation with requirements on how the funds must be spent, the donation must then be spent for that purpose. If the local government is unable to spend the funds for that purpose, it must reject the donation.
That covers the basics of accepting donations. Some local governments seek corporate and community partnerships to sponsor community programs, events, and facilities as part of their business plans for funding. For examples of sponsorship/naming policies adopted by local governments, visit our Corporate Sponsorships and Naming Policies webpage.
In general, local governments are not allowed to make gifts of public funds. Article 8, section 7 of the Washington State Constitution prohibits any local government entity from bestowing a gift or lending money, property, or the entity’s credit to a private party. Section 7 does allow public funds to be used in providing “necessary support for the poor and infirm.” An example would be utility assistance programs that provide payments or reduced rates to low-income customers or individuals with disabilities.
Outside of supporting the poor and infirm, a donation from a local government would need to meet certain criteria. The courts have used a two-step process to determine whether or not a local government has bestowed a gift of public funds. First, they will look to see if the funds were used to carry out a fundamental purpose of government. If the answer is yes, then there has not been a gift of public funds. Second, the courts will determine whether the government had “donative intent” and whether it received an adequate return for any transfer of funds. Visit MRSC’s Gift of Public Funds webpage for a more in-depth analysis of this constitutional prohibition.
Many local governments can run into a gift of public funds issue when donating surplus property. Local governments should have surplus procedures and policies in place and ensure adequate consideration is made to avoid gifting the surplus. In some instances, surplus items will have de minimis or no monetary value. The local government could likely justify donating such items if it includes certain steps as part of the surplus process. For example, the governing body should declare such items surplus and include a description which demonstrates the items have little to no value (e.g., outdated, obsolete, broken, etc.)
In 2014 the City of White Salmon was getting rid of old, obsolete tasers. The resolution for the surplus of these tasers notes that the city will donate the taser batteries and holsters to Skamania County, and it lays out the justification for this: The county still used the same model of taser being surplused, so the city decided to donate the holsters and batteries as spare parts. The city was able to justify donating these parts since the county is another local government and the citizens of the city receive services from the county on occasion. As such, there was no gift of public funds problem.
