Temp. Reg. § 53-4958-4T(a)(4)—Benefits Provided to Donors
The temporary regulations provide that one of the factors tending to show that a person has substantial influence is that "the person is a substantial contributor to the organization" taking into account only contributions in the current year and the preceding four years. Temp. Reg. § 53.4958-3T(e)(2)(ii). Major donors may therefore be disqualified persons.
The temporary regulations provide two forms of relief to major donors. First, preferential treatment "offered to all other donors making a comparable contribution as part of a solicitation intended to attract a substantial number of contributions" is a fact tending to show that the donor does not have substantial influence and is therefore not a disqualified person. Temp. Reg. § 53.4958-3T(e)(3)(v). Second, benefits provided to a donor who is a disqualified person are disregarded if any non-disqualified person making a contribution above a specified amount is offered substantially the same benefit and a significant number of non-disqualified persons make a contribution of at least that amount. Temp. Reg. § 53.4958-4T(a)(4)(iii).
These relief provisions are appropriate and should be retained. However, they are limited to situations where the donation is part of a fundraising campaign. Many major contributions are made in isolation, not as part of an organized campaign.
Any benefit provided to a major donor should not be objectionable if the value of the benefit does not exceed the value of the donation and the donor treats the benefit as a quid pro quo that reduces the charitable income tax deduction arising from the donation. We thus recommend that the temporary regulations be modified to treat such quid pro quo benefits as economic benefits which are disregarded for purposes of section 4958 by adding a new subparagraph (vi) at the end of Temp. Reg. § 53.4958-4T(a)(4) that would read as follows: "(vi) Quid pro quo contributions. Any benefit received by a donor that is less than the donor’s contribution and is taken into account by the donor as a reduction of the donor’s charitable income tax deduction."
