Employer Matching Donations - Donate to University w/ Designation

Employer Matching Donations - Donate to University w/ Designation
0

#1

So, some employers do matching donations. I have seen where someone did this to write off the donation, but my intent isn’t the write off, it is the match. Let’s say that I donate to the university my kid is attending and designate it as a scholarship for my child. Any issues there?


#2

This is an automatically-generated Wiki post for this new topic. Any member can edit this post and use it as a summary of the topic’s highlights.


#3

The HUMAN Fund is a better place to do the donation/match, especially if you don’t value your job much.


#4

You can donate to the foundation, but you can’t designate it as a scholarship to a single person (your kid). The university will absolutely not let you do that. It probably would not even qualify as a charitable contribution, since (among other reasons) you would be reaping a 1:1 benefit.


#5

I am more than fine with it not qualifying as a charitable donation, like I already said, it isn’t about the tax write off, it is just about the match. I have donated to a different university before and designated its use (but not a specific individual). Someone else has done it and got penalized by the IRS for claiming the deduction. I am just wondering if there are other issues… I won’t claim the write off. so that part is easy.


#6

Haha, this is like a law school issue-spotter. I’ll throw out a couple since I’m not in law school anymore.

So you’re asking if you can pay your child’s tuition at a school, and have your company match your child’s tuition payment under the guise of a charitable contribution? Or are you saying - you will be paying your child’s tuition and your company will be donating to the school to match your contribution, but not going to your child only (i.e. just using your child’s tuition payment to “force” your company to donate to the school)?

First problem I see is directly with your employer. So, is it worth losing your job or being disciplined by your employer in some other way (only you know your company’s culture, so something for you to determine)? Your employer will probably see the designation on the receipt. For our company match, we have rules on designations we can use. They probably wouldn’t match if they see you’re just submitting a tuition payment as a charitable contribution to them. If the company doesn’t have a problem with it (and doesn’t care whether the transaction qualifies for the increased contribution limitation for matching donations) you’re basically just asking your company to donate to the school your child goes to, which I don’t see a problem with per se, but there may be issues with disguised salary depending on the circumstances.

Second problem is that the school is very unlikely to accept such a designation. You almost certainly can’t simply create your own scholarship by listing it as a designation on an online form. The school has to allow it and there is probably some administrative process they have to go through to set it up.

Third, the school would be very unlikely to accept the designation because your “contribution” would be coming in for accounting purposes as a charitable contribution. There are differences in how the schools treat contributions and tuition payments.

If you want your company to also match the designation (i.e. you want your company to pay your child’s tuition) you will likely run into issues for tax purposes - the company is basically paying you a salary and thus they couldn’t do it through their foundation as it would be an improper use of tax exempt funds. It may also have to be included in your wages, depending on the circumstances.

Since you’re dealing with two entities which you will have a relationship with for at least the next couple years, the question is - if you are completely up front with both, will they do what you want them to do? I have a guess as to the answer to that, but again - only you know the workings of the entities involved. If you are not up front with them and they find out that you’re doing something they don’t approve of, can you live with the consequences?


#7

Then your employer couldn’t/shouldn’t deduce the expense for the same reasons as I mentioned. There is a chance you may get away with it, but I wouldn’t risk my employment on it.


#8

This is the answer to 95% of all of life’s questions… Well said!


#9

When I worked for a big company with a donation matching program, they specifically excluded any donations to private schools and I believe colleges and universities, presumably for exactly this kind of shenanigan. Check the details on your matching plan, they may have already made the choice for you.