Gifts to Fund Raisers Touch Off Debate

A fund raiser’s job is to develop close relationships with wealthy donors and motivate them to give to charity. But

sometimes donors become just as interested — if not more interested — in the welfare of the fund raisers, and decide to reward them financially.

Many seasoned fund raisers say they have been offered valuable items by donors or discovered they were named as beneficiaries of a will. “It’s almost like the better the fund raiser is, the more likely this is to occur,” says David Wheeler Newman, a Los Angeles planned-giving attorney.

The American Council on Gift Annuities, the Association of Fundraising Professionals, and the National Committee on Planned Giving have ethics codes that bar their members from seeking personal gain in any relationship with donors. But fund raisers sometimes disagree about what kinds of gifts from donors are acceptable and how best to follow ethical rules.

Altruism or Unfair Gain?

Take the case of a fund raiser who received $300,000 through a donor’s will a few years ago, says Frank Minton, president of Planned Giving Services, a Seattle consulting company. (Mr. Minton declines to name the fund raiser or the institution where he works.)

Under the terms of the will, Mr. Minton says, even if the fund raiser turned down the bequest, the charity would not benefit; the $300,000 would simply be divided among other people named in the will. So the fund raiser decided the best way to help his charity would be to accept the gift and turn it over to the organization. But the fund raiser did get a financial benefit, Mr. Minton says. He wrote off the gift as a charitable tax deduction, realizing tens of thousands of dollars in tax savings over the following six years.

Mr. Minton says some experts would applaud the fund raiser’s decision to turn the money over to charity but question the tax deduction because it appears to go against ethics codes barring fund raisers from using their professional relations with donors for personal gain. However, he notes, opinions are divided among the experts he joined in a recent discussion of the matter in an online forum for fund raisers, lawyers, estate planners, and others who specialize in planned gifts.

Some participants said that fund raisers should never accept such a gift in the first place — even if they planned to give it to the charity. Others argued that taking a tax deduction would be acceptable if claiming the deduction allowed the fund raiser to avoid out-of-pocket costs involved in turning the gift over to his or her institution. For example, it might be acceptable if the fund raiser had to pay taxes on the bequest. While in most cases recipients don’t pay taxes on money they receive from a bequest, some types of bequests are taxed: If the fund raiser had been given money from a donor’s individual retirement account, that would be regarded as taxable income.

The experts’ differing views, says Mr. Minton, highlight how difficult it can be for fund raisers to determine the most ethical course in handling personal gifts from donors.

No Offense

It is also frequently uncomfortable — and tricky — for fund raisers to behave ethically without offending or alienating some donors who are intent on making a heartfelt gesture. Cary Tamura, a planned-giving consultant in Brea, Calif., recalls one such experience as he visited an elderly donor a few years ago, when he worked at the Salvation Army’s Cascade Division in Portland, Ore.

The donor, says Mr. Tamura, was grateful for his help in finding an assisted-living facility for her to move into and setting up a planned gift that would provide her with income while she was alive and go to the charity after she died.

“Impulsively, she took a beautiful wall clock down and gave it to me,” recalls Mr. Tamura. “My immediate reaction was to blurt out, ‘Thank you, but I can’t accept it.’ As soon as I said it, I wanted to bite my tongue for sounding so ungrateful.”

To avoid offending the woman, Mr. Tamura said he quickly “backpedaled” and told the donor he could use a clock in his office and asked if it was OK to place the wall clock there.

“The next time the donor visited my office, she was pleased to see it,” Mr. Tamura says. “But of course, I left the clock at the organization when I left.”