Donating for a specific family

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sogm
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Donating for a specific family

Post by sogm »

My wife and I donated funds to a church for a specific family in need in our town. Because we specified who the funds were to go to, the church treasurer said he would not give us a letter stating our donation was tax deductible.
Perfect.

Is there a way we can donate to specific families in need and receive a tax deduction?

Just wondering.
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Re: Donating for a specific family

Post by Sidney »

sogm wrote:Is there a way we can donate to specific families in need and receive a tax deduction?
Not directly.
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Re: Donating for a specific family

Post by tomd37 »

Just wondering if the church was sponsoring this family in any way, that is making announcements seeking support for this family. If so, maybe the funds should have been donated to and in the name of the church for transfer to the family. The way the donation was made to a qualified charitable organization.

Donations to individuals do not qualify as a charitable donation and cannot be legally claimed as a donation to a qualified charity.
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cheese_breath
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Re: Donating for a specific family

Post by cheese_breath »

Probably not. Individuals aren't considered qualified charitable organizations.

http://www.irs.gov/Charities-&-Non-Prof ... Deductions

If you really want to help the family just forgo the tax deduction.
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Re: Donating for a specific family

Post by TheTimeLord »

The church is doing what it should in following the law and protecting itself. There have been scams in the past where people have try to filter money to relatives or give money to people who would then kick it back to them.
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Re: Donating for a specific family

Post by mhc »

I sponsor missionaries and specific children through various organizations. I suspect that if I look under the hood, the non-profit can direct the funds as they see fit which keeps the contributions tax deductible. Your church would need to do something like this I would assume. If your church set up a program to help families and they "adopted" this family, then you could donate to that program.

When I know people who need help, I just help them and not worry about the tax write off. Doing the right thing is always the right thing to do.

Note: I really have no idea how any of this works, but I know my tax deductible contributions support specific people.
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Re: Donating for a specific family

Post by cheese_breath »

mhc wrote:I sponsor missionaries and specific children through various organizations. I suspect that if I look under the hood, the non-profit can direct the funds as they see fit which keeps the contributions tax deductible. Your church would need to do something like this I would assume. If your church set up a program to help families and they "adopted" this family, then you could donate to that program.

When I know people who need help, I just help them and not worry about the tax write off. Doing the right thing is always the right thing to do.

Note: I really have no idea how any of this works, but I know my tax deductible contributions support specific people.
All the organizations I'm familiar with identify potential families or individuals, and the contributor chooses which ones he wishes to support from the pre-selected group. Presumably the charity does some kind of evaluation to determine if the families or individuals really need their support. Other than the very large churches I wonder how many have the resources to do the proper 'vetting' of potential recipients to protect themselves.
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dm200
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Re: Donating for a specific family

Post by dm200 »

It seems to me that this is sometimes a "gray" area, as well as differences in the way churches (or other 'charitable' institutions) actually do things and/or interpret the rules.

My understanding is that (taken narrowly and literally) if you donate to a church, say, $100 and ask/request/demand that the $100 go to or be used specifically for the John Smith family - that $100 donation is not a tax deductible contribution. Where the line is on that interpretation is, in my opinion, both not absolutely clear - nor do many/most organizations take it so strictly.

In my opinion and understanding, most churches and donors will consider such a $100 donation as tax deductible. Although I am not a "first hand" knowledge party to such situations, I know several such situations that were described to me much like this post - where a church donor made a donation to the church for "the John Smith family" and received and used the tax deduction.
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Re: Donating for a specific family

Post by DonCamillo »

dm200 wrote:It seems to me that this is sometimes a "gray" area, as well as differences in the way churches (or other 'charitable' institutions) actually do things and/or interpret the rules.

My understanding is that (taken narrowly and literally) if you donate to a church, say, $100 and ask/request/demand that the $100 go to or be used specifically for the John Smith family - that $100 donation is not a tax deductible contribution. Where the line is on that interpretation is, in my opinion, both not absolutely clear - nor do many/most organizations take it so strictly.

In my opinion and understanding, most churches and donors will consider such a $100 donation as tax deductible. Although I am not a "first hand" knowledge party to such situations, I know several such situations that were described to me much like this post - where a church donor made a donation to the church for "the John Smith family" and received and used the tax deduction.
This is not a grey area at all, and has not been for many years. Back in the early 1970s, my wife and I donated $500 through a church to help support a missionary on furlough, and deducted it on our taxes. The IRS disallowed the deduction, stating that because it was for the use of a particular family, it was not deductible.

The one exception is that you can specify funds for a particular charitable organization. So if you give money to a church, or to a particular mission, and a large portion of the budget of that organization goes to an individual, it is still deductible. For example, in many small churches, over half the budget goes to support the pastor, but donations are still deductible. It has long been a practice in smaller Protestant denominations that persons going on missions have to raise their support by seeking commitments from churches and individuals toward their expenses. As long as the money goes to a legitimate organization that in turn pays them AND the other expenses of the mission, it can be deducted.
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Re: Donating for a specific family

Post by NYCPete »

sogm wrote:My wife and I donated funds to a church for a specific family in need in our town. Because we specified who the funds were to go to, the church treasurer said he would not give us a letter stating our donation was tax deductible.
Perfect.

Is there a way we can donate to specific families in need and receive a tax deduction?

Just wondering.
(Emphasis mine)

Did the church ask for gifts to support this family? If not, I suspect it's in the way you worded things. You can't tell the church to accept money from you, then turn around and give that money to a particular family. Churches and charities aren't pass through organizations for people to send money to each other and get a tax deduction.

The church might be willing to be the go-between so people may anonymously give cash to a family in need. If that was your reason for giving to the church in the first place, then tell them to do that.

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Re: Donating for a specific family

Post by Grt2bOutdoors »

sogm wrote:My wife and I donated funds to a church for a specific family in need in our town. Because we specified who the funds were to go to, the church treasurer said he would not give us a letter stating our donation was tax deductible.
Perfect.

Is there a way we can donate to specific families in need and receive a tax deduction?

Just wondering.
No. Individuals are not registered tax-exempt charities. You are donating out of the goodness of your heart, that goodness does not include a tax deduction. It's like you seeing me in the street and buying me a cup of coffee - the IRS will not permit you to deduct the cost of the coffee, its more like you are doing me a favor or giving me a hand.
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Re: Donating for a specific family

Post by cheese_breath »

Even if the church had a fund for helping needy families and you donated to the fund specifying a particular family I doubt it would be allowed. Wouldn't that be analogous to donating to the bible fund and specifying your contribution had to buy bibles from a specific bible store, or donating to the building fund and specifying your contribution had to be spent on a specific construction company?
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Re: Donating for a specific family

Post by dm200 »

Grt2bOutdoors wrote:
sogm wrote:My wife and I donated funds to a church for a specific family in need in our town. Because we specified who the funds were to go to, the church treasurer said he would not give us a letter stating our donation was tax deductible.
Perfect.

Is there a way we can donate to specific families in need and receive a tax deduction?

Just wondering.
No. Individuals are not registered tax-exempt charities. You are donating out of the goodness of your heart, that goodness does not include a tax deduction. It's like you seeing me in the street and buying me a cup of coffee - the IRS will not permit you to deduct the cost of the coffee, its more like you are doing me a favor or giving me a hand.
But - that is not the situation described here. As described, the OP was not giving directly to, nor paying directly anything for the "specific family". Rather, the OP donated funds to a church with the request that the amount donated be used for or given to this specific family. What is not clear (and whether or not it would make a difference) is whether the request or desire to help this specific family was the initiative of the OP or was already being somehow considered by the church.

As I posted earlier, I believe it is not an uncommon practice for church members to see or learn about a specific "family in need" and approach the church with an offer (or request) that the church financially help such a family and the church member will donate that amount to the church. While I cannot cite any reference, it is my belief that in most cases the church will consider such an amount to be a "Charitable" or "Church" donation. Whether that is "technically" correct or not - I just don't know.
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sogm
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Re: Donating for a specific family

Post by sogm »

I went to the church pastor ( I am not a member of the church) and asked if there was a family in town that needed financial help. He said yes and I gave him $1500 for that family. The church treasurer advised my donation was not deductible.
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Re: Donating for a specific family

Post by tim1999 »

If you write out the check payable to the church, and verbally tell the church leader "I want this to go to the John Smith family", then how does the IRS ever know? If the donation was questioned for some odd reason, couldn't you just provide the IRS with the church's 501c3 certification? Just don't write "John Smith family" on any part of the paper trail.

Of course, you need to be able to trust that the church will actually give it to your preferred recipient.
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Re: Donating for a specific family

Post by cheese_breath »

Cherokee8215 wrote:If you write out the check payable to the church, and verbally tell the church leader "I want this to go to the John Smith family", then how does the IRS ever know?
Hiding information from the IRS isn't the point. We're really dealing with the question, Is it legally deductible?
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Re: Donating for a specific family

Post by stan1 »

Cherokee8215 wrote:If you write out the check payable to the church, and verbally tell the church leader "I want this to go to the John Smith family", then how does the IRS ever know? If the donation was questioned for some odd reason, couldn't you just provide the IRS with the church's 501c3 certification? Just don't write "John Smith family" on any part of the paper trail.

Of course, you need to be able to trust that the church will actually give it to your preferred recipient.
The church treasurer knows, and he's doing his job exactly as he's supposed to. OP asked for a specific family therefore its a gift. If OP had said to the pastor "I'd like to make a contribution to a charity that helps local families in need" the pastor may have said "we do that, just designate your donation to our community relief fund and we'll make sure it ges to people who can use it" or vectored OP over to a charity that does assist local families in need.
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Re: Donating for a specific family

Post by 209south »

We sponsored a fine young man through a parochial secondary school...a group of families were involved and we tried to have the funds channeled through the financial aid office so they would be deductible - ran into the same issue, which is understandable...could certainly open philanthropy up to shady activity if one could 'give' to a friend and take a deduction. On the other hand, this was a legitimate case of need and we could have raised more money if the deduction had been available. The school does receive abundant 'unrestricted' donations, which are deductible and are generally used for financial aid, but the 'direct giving' approach doesn't work.
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Re: Donating for a specific family

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leonard
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Re: Donating for a specific family

Post by leonard »

Mr. Church Treasurer, here's a tithe to the church's general fund. (Wink)

Charity is charity, if it is going to the deserving.
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Re: Donating for a specific family

Post by The529guy »

Pajamas wrote:http://www.irs.gov/pub/irs-pdf/p526.pdf

See page 6.
Nice find.
Contributions to individuals who are needy or worthy. You cannot deduct these contributions even if you make them to a qualified organization for the benefit of a specific person. But you can deduct a contribution to a qualified organization that helps needy or worthy individuals if you do not indicate that your contribution is for a specific person.
Under "Contributions You Cannot Deduct."
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Re: Donating for a specific family

Post by TomatoTomahto »

leonard wrote:Mr. Church Treasurer, here's a tithe to the church's general fund. (Wink)

Charity is charity, if it is going to the deserving.
Why am I not deserving? Hey, I have an idea -- I'll tithe to you if you'll tithe to me.

Moral of the story: any financial transaction that includes a "(Wink)" is not a good idea.
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Re: Donating for a specific family

Post by leonard »

TomatoTomahto wrote:
leonard wrote:Mr. Church Treasurer, here's a tithe to the church's general fund. (Wink)

Charity is charity, if it is going to the deserving.
Why am I not deserving? Hey, I have an idea -- I'll tithe to you if you'll tithe to me.

Moral of the story: any financial transaction that includes a "(Wink)" is not a good idea.
So, how many families need to be included in the charity pool before it's a charity?

Whatever (arbitrary?) number you choose - why is that number "right" and not the one before or after it?

Lady Geek reopened to allow some clarification.

By using "Wink" I was shorthanding the following.

I agree the IRS doesn't allow donations to individuals.

But, the donation could be to the church (or one of it's organized charities).

The reality is a church and a charity are organizations which require input from boards and members to prioritize how they distribute charitable funds. So, I was suggesting that when making the donation, the OP could "lobby" the church and/or it's charity to give to the family, helping the church prioritize how charitable funds are distributed (the "Wink"). Considering that the church already seemed to be on board with helping this family by accepting donations - they would already be onboard with this use of funds. So, OP gives to charitable organization. OP talks with charitable organization about prioritizing how funds are distributed. All criteria is met for an "honest" deductible donation.

Assuming that process was followed - all seems above board to me.
Last edited by leonard on Sun Nov 23, 2014 11:11 am, edited 1 time in total.
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Re: Donating for a specific family

Post by LadyGeek »

Discussions of dishonest behavior or bypassing the law are totally unacceptable.

The answer has been supplied; further discussion will not be productive. This thread has run its course and is locked.


The online version: Publication 526 (2013), Charitable Contributions

Update: See below.
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Re: Donating for a specific family

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After receiving a PM, I received a different perspective which suggests this approach may be legal.

This thread is unlocked to clarify this perspective.
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Re: Donating for a specific family

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The reality is a church and a charity are organizations which require input from boards and members to prioritize how they distribute charitable funds
.

There are some (perhaps many) churches (including many in my own affiliated denomination) that have structures/governance where there is NO input from any Board, nor member to determine any aspects of distribution of charitable funds.

For this (and several other reasons), I have chosen my current affiliation where the approach is MUCH different.
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Re: Donating for a specific family

Post by Sidney »

One of the reasons we make most of our charitable donations anonymously is to avoid any perception of meddling with the governance of the charity.
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Re: Donating for a specific family

Post by TomatoTomahto »

Leonard, I'm not a big fan of most deductions (mortgage interest, charitable, etc.). They might have been well-intentioned and perhaps they do some good.

I find a "narrowly targeted" charitable deduction even less appealing than a broader one. If I want to give money to a ne'er-do-well friend larger than a set amount, I have to file forms and it affects my estate's tax situation. Otoh, if I get a church to make the same donation, not only does it not affect my estate, I get a tax deduction. Doesn't seem right to me.
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Re: Donating for a specific family

Post by ieee488 »

There are local charities which during the holiday season have wishlists of children.

Would then these gifts not be tax-deductible?
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Re: Donating for a specific family

Post by Sidney »

ieee488 wrote:There are local charities which during the holiday season have wishlists of children.

Would then these gifts not be tax-deductible?
If they are a qualified 501(c)(3) organization, then yes. They will know.
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Re: Donating for a specific family

Post by TomatoTomahto »

Sidney wrote:One of the reasons we make most of our charitable donations anonymously is to avoid any perception of meddling with the governance of the charity.
It also cuts down on the solicitation phone calls and mail :D
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Re: Donating for a specific family

Post by Sidney »

TomatoTomahto wrote:
Sidney wrote:One of the reasons we make most of our charitable donations anonymously is to avoid any perception of meddling with the governance of the charity.
It also cuts down on the solicitation phone calls and mail :D
Yes, we live in a small town and it is hard to avoid the solicitation and various invitations without cloaking via DAF.
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Re: Donating for a specific family

Post by chocolatemuffin »

sogm wrote:I went to the church pastor ( I am not a member of the church) and asked if there was a family in town that needed financial help. He said yes and I gave him $1500 for that family. The church treasurer advised my donation was not deductible.
Does the church have a love fund? If so, you can just donate to the love fund and it would be tax deductible. You can't specify that the money is to go to a particular family, but it sounds like you aren't actually looking to help a particular family anyways, but just want to help someone who's in need? Your money would be tax deductible as long as the church has discretion on how to use the money.
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Re: Donating for a specific family

Post by TomatoTomahto »

chocolate muffin wrote:...but it sounds like you aren't actually looking to help a particular family anyways...
I think the thread title says otherwise.
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Re: Donating for a specific family

Post by chocolatemuffin »

TomatoTomahto wrote:
chocolate muffin wrote:...but it sounds like you aren't actually looking to help a particular family anyways...
I think the thread title says otherwise.
Here's the OP's follow-up:

"I went to the church pastor ( I am not a member of the church) and asked if there was a family in town that needed financial help. He said yes and I gave him $1500 for that family. The church treasurer advised my donation was not deductible."

It sounds like (at least to me) that the OP just wants to help someone. What I am saying is that instead of designating the money to that particular family, the OP should just designate the money to a love fund if it's available, and give the church the discretion of whom to give the money to, which will make the donation tax deductible.
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Re: Donating for a specific family

Post by cheese_breath »

chocolatemuffin wrote: It sounds like (at least to me) that the OP just wants to help someone. What I am saying is that instead of designating the money to that particular family, the OP should just designate the money to a love fund if it's available, and give the church the discretion of whom to give the money to, which will make the donation tax deductible.
But that's not what he wants to do. He want's to help a specific family he's identified and try to get a tax deduction for it.
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Re: Donating for a specific family

Post by chocolatemuffin »

cheese_breath wrote:
chocolatemuffin wrote: It sounds like (at least to me) that the OP just wants to help someone. What I am saying is that instead of designating the money to that particular family, the OP should just designate the money to a love fund if it's available, and give the church the discretion of whom to give the money to, which will make the donation tax deductible.
But that's not what he wants to do. He want's to help a specific family he's identified and try to get a tax deduction for it.
I understand that OP's original question has to do with helping a particular family. I think the subsequent responses from other people have made it clear that the IRS wouldn't allow donation to a particular family to be tax deductible.

From reading OP's follow-up post, I see that the OP doesn't actually know that family. He/she simply got the name from the pastor of a church. In order for the donation to be tax deductible, the church would need to have discretion over the use of the money. My point is that given the circumstances, it may be a good idea to donate to the love fund instead if one is available (and if it's still possible to reverse that previous donation):

- Since the pastor himself named that family, there's a good chance that at least some of the money would go to that family.
- If the money goes to a different family, then perhaps the pastor has decided that the other family is in even greater need.

That is, of course, my own personal opinion only and the OP may disagree.
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Re: Donating for a specific family

Post by dm200 »

chocolatemuffin wrote:
cheese_breath wrote:
chocolatemuffin wrote: It sounds like (at least to me) that the OP just wants to help someone. What I am saying is that instead of designating the money to that particular family, the OP should just designate the money to a love fund if it's available, and give the church the discretion of whom to give the money to, which will make the donation tax deductible.
But that's not what he wants to do. He want's to help a specific family he's identified and try to get a tax deduction for it.
I understand that OP's original question has to do with helping a particular family. I think the subsequent responses from other people have made it clear that the IRS wouldn't allow donation to a particular family to be tax deductible.

From reading OP's follow-up post, I see that the OP doesn't actually know that family. He/she simply got the name from the pastor of a church. In order for the donation to be tax deductible, the church would need to have discretion over the use of the money. My point is that given the circumstances, it may be a good idea to donate to the love fund instead if one is available (and if it's still possible to reverse that previous donation):

- Since the pastor himself named that family, there's a good chance that at least some of the money would go to that family.
- If the money goes to a different family, then perhaps the pastor has decided that the other family is in even greater need.

That is, of course, my own personal opinion only and the OP may disagree.
Since none of us (including the OP) knows 100% of the detailed reasons/justifications/etc. of this Church/Pastor/Treasurer stating that they would not give the OP a letter that the donation was tax deductible, we cannot reach a fully clear conclusion. I suspect that this decision may have been influenced by the fact that the OP is not a member of that church. It is also possible that this interpretation of tax deduction eligibility was based on, or influenced by something specific to that church/pastor/treasurer - such as "guidance" from the denomination or previous experience.

Having been involved, to a small degree, in things like this - as well as having seen some such donations, it is my opinion that most churches, pastors, etc. would either classify such a donation as tax deductible or advise/assist (in a 100% legal/proper manner) the OP in how to do such a donation such that it is tax deductible.

Regarding the not-so-proper methods some folks use - I was acquainted with some folks years ago that always wrote checks to a church for various kinds of things that were clearly and unambiguously NOT tax deductble - but then claimed these expenditures (where they had cancelled checks to the church) as tax deductible.

One thing I note now is that a particular church is very, very detailed in how it categorizes checks received - clearly separating checks that are (from the church's perspective) tax deductibe FROM checks written for things (such as purchases of various things) that are clearly NOT tax deductible.
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sogm
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Re: Donating for a specific family

Post by sogm »

Thank you all for the replies, have a great Thanksgiving!
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Re: Donating for a specific family

Post by leonard »

TomatoTomahto wrote:Leonard, I'm not a big fan of most deductions (mortgage interest, charitable, etc.). They might have been well-intentioned and perhaps they do some good.

I find a "narrowly targeted" charitable deduction even less appealing than a broader one. If I want to give money to a ne'er-do-well friend larger than a set amount, I have to file forms and it affects my estate's tax situation. Otoh, if I get a church to make the same donation, not only does it not affect my estate, I get a tax deduction. Doesn't seem right to me.
I am assuming that the family is in actual need. Also, I am assuming the OP genuinely wants to help the family but would also - like any of us - maximize their tax benefit. The process I specifically outlined above does all of that - above board.

BTW - every charitable donation eventually goes to someone specific. A think what doesn't seem "right" to me is that if there are 2 (or more) families in the charitable pool to receive the donations - the deduction is great. But, if it goes from 2 to 1 - the tax deduction for the giver is suddenly not OK. That make any sense to you? Seems arbitrary to me.

One more thing - money is fungible. Once I give a check to the church, they cash it and it goes in to an account. Technically, I have no idea where that dollar ended up - unless the only thing in that account was that one donation.
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cheese_breath
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Re: Donating for a specific family

Post by cheese_breath »

leonard wrote: BTW - every charitable donation eventually goes to someone specific. A think what doesn't seem "right" to me is that if there are 2 (or more) families in the charitable pool to receive the donations - the deduction is great. But, if it goes from 2 to 1 - the tax deduction for the giver is suddenly not OK. That make any sense to you? Seems arbitrary to me.
That's not really the point. Allowing the donator to choose the specific someone presents possibilities of conflict of interest.
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Re: Donating for a specific family

Post by Jack FFR1846 »

My wife worked in a church in the ministry that helped those in need. They had a budget and rules for qualifying those in need. They had no connection to the donation end of things. Thus, if someone came to them to point out a needy family and offered money towards helping that family, they had no mechanism to make that connection. They would direct the giver to the proper group who could accept the donation. The donation would not, however change the budget for helping families.
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Re: Donating for a specific family

Post by TomatoTomahto »

Leonard wrote:One more thing - money is fungible. Once I give a check to the church, they cash it and it goes in to an account. Technically, I have no idea where that dollar ended up - unless the only thing in that account was that one donation.
Oh please. The way you have set it up, if you don't give a check, the family gets that much less money (however fungible money might be). I am surprised that you don't see the opportunities for misadventure and conflict of interest.

How would you feel if I donated, oh, say, the amount of annual tuition to a private school (non-profit) for a scholarship for my next-door neighbor's kid, and quelle surprise, my next-door neighbor does the same for my kid?
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Re: Donating for a specific family

Post by Alex Frakt »

Locked. The question has been answered. This is not the site for debates on tax policy.
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