Fremont City Council Meeting: 09/03/24 07:00 PM
3300 Capitol Avenue Div/Dept: Finance Department
Fremont, CA 94538 Category: Code Adoptions & Amendments
SCHEDULED
Sponsors:
COUNCIL STAFF REPORT (ID # 5248) DOC ID: 5248
Updated: 8/29/2024 9:52 PM by Susan Gauthier Page 1
REVISE MUNICIPAL CODE TO REFLECT IRS GUIDANCE ON DONATIONS - Introduce an Ordinance Amending Fremont Municipal Code Section 3.20.090(b) to Reflect Internal Revenue Service Guidance on Acknowledging Donations Contact Persons:
Name: David Persselin
Title: Finance Director
Div/Dept: Finance Department
Phone: 510-494-4631
E-Mail: [email protected]
Executive Summary: This report provides information supporting changes staff is recommending to the Fremont Municipal Code (FMC) conforming the City’s grant procedures for accepting donations to guidance provided by the United States Internal Revenue Service (IRS).
BACKGROUND: Chapter 3.20 of the FMC (the “Purchasing Code”) defines a grant as “any offer to or from the city of property (in the form of a grant, donation, or gift) in return for which no monetary compensation is required,” and specifies that “acceptance of the grant, including any relevant terms and conditions, forms a contract.” The requirements for accepting grants of personal property are provided in FMC Section 3.20.090(b) and include a written acceptance for every grant specifying an estimated value of the property offered .
DISCUSSION/ANALYSIS: IRS Publication 1771 (November 2023) Charitable Contributions - Substantiation and Disclosure Requirements specifies that:
“A donor cannot claim a federal income tax deduction for any single contribution valued at $250 or more unless the donor obtains a contemporaneous written acknowledgment of the contribution from the donee charitable organization. An organization that does not acknowledge a contribution incurs no penalty; but, without a contemporaneous written acknowledgment, the donor cannot claim the federal income tax deduction. Although it’s a donor’s responsibility to obtain a contemporaneous written acknowledgment, a charitable organization must assist a donor by providing a contemporaneous written statement containing:
1. the name of the organization
2. the amount of any monetary contribution
3. a description (but not the fair market value) of any contribution of property
4. a statement that no goods or services were provided by the organization in return for the contribution, if that was the case
5. if the organization did provide goods or services in return for the contribution, a description and good faith estimate of the fair market value of the goods or services.”
To conform the City’s grant acceptance procedures to the IRS guidance, staff recommends setting a minimum value threshold of $250 for a written acceptance, eliminating the fair Council Staff Report (ID # 5248) Meeting of September 3, 2024 Updated: 8/29/2024 9:52 PM by Susan Gauthier Page 2
market value estimate of property requirement in the written acceptance, and including a statement indicating either that no goods or services were provided by the City in return for the grant, gift, or donation, or a description and good faith estimate of the fair market value of the goods or services provided by the City.
The recommended changes to the FMC requirements for grant acceptance do not preclude staff from acknowledging donations of cash or personal property valued at less than $250, but would provide administrative relief for situations in which staff are receiving a high volume of low dollar-value contributions (e.g., used blankets and towels at the Animal Shelter).
FISCAL IMPACT: None.
ENVIRONMENTAL REVIEW: Action on this item is exempt from the requirements of the California Environmental Quality Act (CEQA), per CEQA Guidelines Section 15378(b), as an administrative and/or fiscal activity that does not involve commitment to a specific project that will result in any significant physical impact on the environment.
ATTACHMENTS:
• 2024.09.03 - Ordinance re Donations (Final)
RECOMMENDATION: Introduce an ordinance amending the Fremont Municipal Code to reflect IRS guidance on acknowledging donations.