Giving to the Fund is a Spiritual Privilege "Giving to the Fund, therefore, is a spiritual privilege, not open to those who have not accepted Bahá’u’lláh, of which no believer should deny himself. It is both a responsibility and a source of bounty. This is an aspect of the Cause which, we feel, is an essential part of the basic teaching and deepening of new believers. The importance of contributing resides in the degree of sacrifice of the giver, the spirit of devotion with which the contribution is made and the unity of the friends in this service; these attract the confirmations of God and enhance the dignity and self-respect of the individuals and the community."

(From a letter of the Universal House of Justice to all National Spiritual Assemblies, August 7, 1985)

Proper procedures require that a receipt be issued for each individual contribution. In the case where an Assembly still uses traditional methods of bookkeeping, that is, a physical receipt book is maintained, it is necessary to have duplicate receipts for each contribution—one copy for the donor and the second copy for the record. Issuing of receipts for donations is a good business practice. It Stewardship and Development 21 creates a permanent record of all transactions for the Baha’i Funds. Furthermore, a complete receipt record protects the donor, the treasurer and the entire Assembly, keeping in mind that legally all nine members of the Local Spiritual Assembly have a fiduciary responsibility for the Local Fund. Some communities have members who prefer not receive donation receipts until the end of the year when such receipts are needed for tax purposes. This means that the treasurer must keep good records of each donor’s contributions knowing that a single receipt will be done in a lump sum once a year. But this does not mean detailed records should not be kept for each donor. In the general sense, a monetary contribution receipt should have:

● Donor’s name

● Date

● Amount

● Name of the Assembly

● Signature of the Treasurer or other authorized person

● Earmarking or designation, if any

● Be sure to number the receipts consecutively, if issued manually. Numbered receipts leave a better “audit trail.”

Our National Spiritual Assembly has made it much easier for all contributions made through the Online Contribution System (OCS). For these online contributions, receipts are created as soon as a donation is made and can be obtained by the donor at any time after the donation; the local treasurer should not also create a receipt.

Assembly treasurers will find it prudent to keep themselves informed of certain issues, governmental or otherwise, that affect contributions. Such matters may include, but are not limited to:

● Be informed of tax changes that may affect all aspects of giving and the documentation required for receipting gifts.

● Keep up to date with changes to the tax laws affecting not-for-profit organizations in relation to:

○ New substantiation requirements for donors, and

○ New disclosures for charities.

● Call the Office of the Treasurer if you have any questions about these matters.

Prepare receipts to the donors.

● The method of distributing receipts will also vary from community to community, depending on the way contributions are accepted. If someone hands in a contribution at Feast, the Treasurer may want to prepare a receipt immediately, particularly for cash contributions. If contributions are placed in envelopes, receipts can be returned the same way. Whatever method you use, make the giving and receipt process both efficient and confidential. For localities that choose to hold Feast in several sectors, donations should be turned over to an authorized individual, who will then calculate the total amount contributed and hand over the contributions in a sealed envelope to the local Treasurer before the next Assembly meeting.

What about Receipts for Loose Change?

● Often loose change is contributed anonymously or by children. The Treasurer must issue a receipt to “Anonymous” and;

● The Treasurer must prepare a receipt for all contributions coming into the Local Fund; other income must be receipted or properly recorded in the Cash Journal. The Treasurer should also write duplicate receipts so that a copy can be kept on file.

● If cash is contributed anonymously in a meeting that includes non-registered individuals, then the funds can be put into a humanitarian Fund to be used for humanitarian causes. If the Assembly doesn’t have such a Fund it can either create one or it can forward the funds to the National Humanitarian Fund through the National Fund.

● Here is another situation that might cause difficulty in issuing a receipt. The friends will often travel or purchase an item at the direction of the Spiritual Assembly and ask that their expenses be counted as a contribution to the Fund.

● Only expenses incurred at the request of or with the prior permission of the Assembly need to be receipted. The Assembly is not obligated to issue a receipt for any expense for which it did not request or give prior approval.

● They should provide the Treasurer with expense reports and actual bills supporting it. After the Treasurer confirms the accuracy of the expense report, they should issue a receipt for the contributed expenses. Be sure to list the amount both as a contribution AND as an expense in the Cash Journal.

● When the friends contribute something other than money (such as a gold pin) to the Fund, first the Treasurer needs to log the item in an inventory book of non-cash items. A simple notebook or spreadsheet will serve for this purpose. Then, she attaches a tag with the corresponding inventory number to the item. The log would then include the number, the donor’s name, the item’s description, the contribution date, the Bahá’í Fund that the offering was intended for, appraised value (if available), the selling date and selling price. Such items should be kept in a secure location or lock box.

● Issue a receipt in such situations by giving only a written description of the donated item on the receipt. The donor, not the Treasurer, is responsible for proving how much a gift is worth if the Internal Revenue Service should ask.

● If the donor wants to deduct the value of the donation as a charitable contribution on their federal income tax return, they must do the following:

○ If the value is in excess of $5,000, the donor should have a qualified independent appraiser value the item as of the date of the gift.

○ The appraiser gives the donor an appraisal report and Internal Revenue Service Form 8283 with the appraiser’s section filled out and signed.

○ The donor will need to submit Form 8283 (Noncash Charitable Contributions) to the local Bahá’í Treasurer to sign and indicate the date of the gift.

○ The Treasurer returns form to the donor who attaches it to his income tax return for the year in which the donation is claimed as a deduction.

○ The Treasurer should make a copy of all Forms 8283 signed for donors and keep them on file.

● If the item is sold within two years of the date of its donation, the Treasurer must file an Internal Revenue Service Form 8282 (Donee Information Return) with the IRS and send a copy to the donor.

It might be best to ask the donor if they would prefer selling the item herself, giving the proceeds to the Fund. The donor may have an easier time disposing of the item than the Treasurer.

● The Treasurer may be called upon to sell an item given as a gift to the Bahá’í Fund. It does not matter who purchases it, Bahá’í or non-Bahá’í, since the money is exchanged for the original gift to the Fund at a market price. The sale should, therefore, be recorded in the cash journal as a contribution matching the proceeds from the donated item.

● The amount of the sale counts toward the community’s contribution goal in the month the item is sold even though it may have been given to the Fund several months earlier. The item’s value cannot really be established until it is sold, so to enter any figure when the gift is first received would distort the Assembly’s financial picture.

● The following are the steps that should be taken when a gift of real estate is offered to the Assembly:

○ The Assembly must first decide whether it wishes to receive the property; occasionally, Assemblies may gracefully decline to receive such a gift, and it has the right to do this. Some of the factors that might cause an Assembly to decline the gift would be earmarking restrictions the Assembly cannot comply with; the condition of the property and whether costs would have to be incurred in making the gift salable; a negligible market value or a reliable assessment that the property could not be sold in a reasonable period of time, subjecting the Assembly to tax and other expenses; or the presence on the property of an environmental hazard.

○ Before committing to receive the property, the Assembly should have certain inspections made, especially those that would detect toxic chemicals or other hazards the donor may not know are present, but the Assembly does need to do its “due diligence” in the matter. The cost of such inspections should be discussed with the donor, who may be willing to bear all or part of the expense; and then the Assembly must decide whether it is willing to incur the expense in order to obtain the benefit of the gift.

○ Once agreement is reached, the donor’s lawyer prepares a deed transferring the donor’s interest in the property to the Bahá’í institution (that is, “for the benefit of Spiritual Assembly of the Bahá’ís of [Your Town]”). The lawyer should have the deed recorded in the county recorder’s office in the county where the property is situated and then send the recorded deed to the Assembly. It is also very helpful if the donor can send the Assembly a copy of the donor’s title policy or abstract of deed.

○ The Assembly should issue a receipt to the donor acknowledging the donation of real estate “situated in the City or Town of ..., County or Parish of ..., State or commonwealth of ..., commonly known as (and then give the mailing address for the property).” The receipt should acknowledge the gift as of the date the deed is recorded. No dollar value should be stated in the receipt. The receipt should also state that no goods or services were furnished to the donor in consideration of this gift.

○ At the time the property is received the Assembly will need to notify its insurance agent to determine if it needs to obtain (or “bind”) insurance coverage effective on the date of receipt. Insurance may not be needed for vacant land, but it will certainly be needed if there are any structures on the property.

○ If the donor wants to deduct the value of the donation as a charitable contribution on his federal or state income tax return, the process is like the one used for In-Kind contributions (see above):

○ If the value is more than $5,000, the donor should have a qualified independent appraiser appraise the real estate as of the date of the gift. The date of the gift for tax purposes is the date the deed is recorded. The appraisal must be completed and presented to the donor before he files his tax return. The appraiser will give the donor the appraisal report and IRS Form 8283 with the appraiser’s section filled out and signed.

○ The donor will need to send Form 8283 to the Assembly to sign and indicate the date of the gift. The Treasurer must sign the form and return it to the donor who then attaches it to his income tax return for the year in which he claims the donation as a deduction. The Assembly should photocopy and keep on file all Forms 8283 signed for donors.

○ After the Assembly receives the deed, it will usually want to contact a reputable real estate agent and list the property for sale on a multiple listing basis. Assemblies are not in the real estate business, so holding a property as an investment is usually not a good idea unless the Assembly can look to very knowledgeable people, Bahá’ís or not, for reliable advice on the market.

○ A number of things should be considered in selecting an agent. The agent should be able to demonstrate some experience with sales of similar properties, and should outline the marketing strategy to attract buyers. The agent should be able to provide information on comparable sales and prices in the area.

○ The Assembly should place an expiration date on the listing that is in line with custom and usage in the area; normally this is not more than 6 months. The agent’s commission should be commensurate with the custom in the market, and is usually negotiable. The Assembly will need to keep in touch with the agent and receive periodic progress reports.

○ The Assembly may also need the services of a lawyer to represent them in the sale. Many states, however, use escrow companies to transfer title, and lawyers are not needed. A title company typically will act as the escrow agent. The title company does a title search, issues a title insurance policy, draws up the deed and settlement statement and computes all of the expenses involved. After all of the documents are ready and the funds are on deposit, the title company will close the transaction.

○ In states that do not use escrow companies, an attorney will be needed to order the title insurance or abstract the deed and represent the seller at the closing. In most instances the realtor can recommend a lawyer for this purpose. The lawyer can be used to review and approve any contract terms in a purchase offer, but the Assembly of course makes the final decision on whether to accept an offer and enter into a contract to sell.

○ The attorney handles all communications with the buyer’s attorney, and the realtor will handle communications with the buyer or the buyer’s realtor.

○ After an offer has been received, the Assembly needs to decide whether to accept the offer “as is” or to propose a counter offer with different terms. Normally, any offer a buyer proposes is answered with a counter offer. The Assembly will need to consult with legal counsel before signing any offer or making any counter offer as there are a number of important protections that need to be in place and in effect in the counter offer.

○ After the contract is signed, the lawyer prepares the documents to close the deal. In order to accomplish this, they will need a certified copy of the Assembly’s “resolution to sell.” they will then prepare a deed, affidavit of title, seller’s closing statement and various other documents for the Assembly to sign and return. It may be useful to give the attorney a power of attorney to sign any other papers as may be needed at the closing.

○ When the property is sold, the Assembly will need to be sure to cancel any insurance coverage it may have on the property. Also, if the property is sold within two years of the date of its receipt by the Assembly, the Assembly must file IRS Form 8282 and send a copy to the donor.

● There are two ways that your Assembly can receive offerings in the form of stock shares: broker to broker and via stock certificates.

○ Broker to Broker - The Treasurer should ask the donor to instruct his broker to transfer the stock to a broker used by the Assembly. If the Assembly does not have a broker, it will want to find one if it expects to get gifts of this kind. Referrals from friends known to the Treasurer and the Assembly are a good starting point in the search for a good broker. The Assembly’s broker will inform the Assembly on the day the stock is received into the Assembly’s account. The Assembly would normally give the order to sell the stock immediately; again, Assemblies are not in the investment business and holding the stock means the Assembly is speculating on its future value.

○ Stock Certificate - When the donor has possession of a stock certificate which is in the donor’s name, the Treasurer would instruct the donor to send the stock certificate by certified or registered mail to the Assembly, together with a letter stating that the stock is a gift to the Local Spiritual Assembly; the gift may be made without restrictions or, if the donor has a specific purpose in mind, with the expressed wish, hope and desire that the proceeds of the stock’s sale might be used for a particular fund or project.

○ Also, the Treasurer should instruct the donor to sign a blank stock power (a form that transfers control of the stock to the Assembly) and mail it separately, for security reasons, by regular mail to the Assembly. The Treasurer sends the stock certificate and the signed stock power by certified mail to the broker used by the Assembly with instructions to sell the stock.

○ The donor should not go to the trouble of having a certificate issued in the name of the Local Assembly. The transfer can be done as described above.

● Issuing Receipts for Gifts of Securities

○ Upon receiving the securities, the Treasurer should prepare a receipt as of the date they are received and indicate the number of shares and a description of the securities. The IRS requires the donor to determine the value of the donation based on the closing price for the security on the date the donor places the shares in the mail, or in the case of an electronic transfer, the date of the transfer. It is not necessary, and may in some instances prove misleading for tax purposes, for the Treasurer to specify a value for the securities if he values the shares on any date other than the correct date for tax purposes. If the donor wants to know the value on the date of receipt by the Assembly, it is permissible for the Treasurer to indicate that information on the receipt as long as the receipt clearly marks that the value is as of the date of receipt, and that for tax deduction purposes the proper value is as of the date of mailing or transfer.

● There is a slight difference between earmarked funds and designated funds. As indicated above, designated funds are basically funds that are just passing through one institution but are not necessarily restricted. Using the Internal Revenue Service (IRS) terminology, designated funds are discretionary (only difference is that the institution receiving it passes it over to the international fund). These contributions can be used as tax deduction items. On the other hand, earmarked or restricted funds are not discretionary by the receiving institution unless they meet certain conditions or criteria. For example, a donor making a $500 contribution with a stipulation that these funds are to be used to purchase a local Assembly meeting table is in effect an earmarked or restricted donation. The Assembly must use this donation only for the purchase of a meeting table. That is only when these funds can be released from restriction status. Similarly, a donation earmarked for an international fund may not be used for any other purpose and would not be tax deductible to the donor.

● The Local Spiritual Assembly makes the decision as to whether to accept an earmarked or restricted contribution and whether it should be counted towards local Fund goal.

IRS Guidelines