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Lexicon 2: Donation

In Furtherance of a Lexicon


Article 2: What is a “Donation”?


In the last article we explored the differences between commonly used organizational terms Nonprofit, Charity, Tax-exempt Org, etc. In this article we explore the concept of a donation. With #GivingTuesday 2021 coming up, we take the opportunity to outline the legal elements of a gift as well as the contextualized meaning of a donation.


To be precise, legally, a gift requires three elements: Delivery, Donative Intent, and Acceptance.


Until a gift has been delivered, the gift-giver is not obligated. The gift-giver can proclaim from the rooftop the generous gift forthcoming, but until delivery occurs there is no gift and generally no obligation upon the gift giver to live up to the boasts.


Donative Intent, distinguishes a gift from other transactional deliveries. Based upon the relationship between the parties, the words and actions of the giver, the circumstances surrounding the delivery, the capacity of the gift-giver, and the totality of the circumstances, the gift-giver must show that there is an actual intention to hand over the valuable asset without receiving commensurate reciprocal value from the recipient. Such intent to donate must be present and evident at the time the gift is delivered. Furthermore, the gift-giver must have the capacity to provide the gift. An Infant, for example, may lack the requisite capability to understand that the infant is giving something of value to another, and not getting commensurate value in return.


Acceptance, in the context of gifts, is the unconditional acceptance of something of benefit. There are innumerable reasons why people may refuse to accept a gift. It may be that the intended recipient has no real way to care for the Liger and therefore must graciously deny the benefit of ownership. Here, however, it is important to be clear with the gift-giver, as courts tend to presume acceptance whenever the gift is something of obvious value.


When all three elements are met, A gift has been made. The gift-giver may not demand back the gift, as ownership has transferred.


A donation is simply a gift. However, when donations are made to a qualifying charitable organization, exempt under IRC §501(C)(3), the donation may be deductible as a contribution in calculating income tax.


Stay tuned for Article 3: Prohibition on Inurement and the Private Benefit Doctrine.


By Nicholas R. Morgan, founding attorney at Idaho Nonprofit Law


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