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§ 21.1 SUBSTANTIATION AND OTHER RECEIPT REQUIREMENTSThis preamble also contains a discussion of a problem, the IRS’s answer towhich was: Stop engaging in the practice. This concerns the making of lumpsumcontributions by employees through their employers other than by payrolldeduction. Employees may make contributions in the form of checks payableto their employer, which then deposits the checks in an employer account andsends the donee charity a single check drawn on the employer’s account. Whenemployees’ payments are transferred to a donee organization in this manner, itis difficult for the charitable organization to identify the persons who made thecontributions, and thus the employees may be unable to obtain the requisitesubstantiation. These difficulties, the IRS advised, can be eliminated if theemployees’ contribution checks are made payable to the donee organizationand the employer forwards the employees’ checks to the charitable organization.(In the context of political fundraising, this is known as bundling.) Thedonee organization then is in a position to provide the necessary substantiationas it otherwise would. (The regulations remain silent on the subject.) This ruleis inapplicable, however, when the distributee organization provides goods orservices as part of a transaction “structured with a view to avoid taking thegoods or services into account in determining the amount of the [charitable]deduction.” 44The regulations define a good faith estimate as meaning the donee charitableorganization’s estimate of the fair market value of any goods or services, “withoutregard to the manner in which the organization in fact made that estimate.” 45These regulations also define the phrase in consideration for. A charitableorganization is considered as providing goods or services in consideration for aperson’s payment if, at the time the person makes the payment, the personreceives or expects to receive goods or services in exchange for the payment. 46Goods or services a donee charity provides in consideration for a payment by aperson would include goods or services provided in a year other than the year inwhich the payment is made. 4744 Id. During the course of hearings on July 11–12, 1995, the House Ways and Means Committee considered aproposal to repeal this charitable gift substantiation rule. See II Fund-Raising Regulation Report (no. 5) 2(Sept./Oct. 1995). Subsequently, the Department of the Treasury expressed its opposition to the proposal ontwo grounds: (1) these rules are intended to “stop known abuse” of the charitable deduction by those who seekto deduct payments to charity that are not actually contributions; and (2) the requirements provide the IRS withan “effective mechanism” for verifying that a payment to a charitable organization “genuinely” represents acharitable contribution. See II Fund-Raising Regulation Report (no. 6) 9 (Nov./Dec. 1995).45 Reg. § 1.170A-13(f)(7). The phrase goods or services means money, property, services, benefits, and privileges.Reg. § 1.170A-13(f)(5).46 Reg. § 1.170A-13(f)(6).47 This rule relates to a subject that torments the fundraising professional: What to do about the situation in whicha charitable organization decides, months after contributions have been made, to honor a class of donors by providingthem a tangible benefit, such as a thank-you dinner? The event or other benefit may be provided in asubsequent year. Does the fair market value of this benefit have to be subtracted from the amount of the gift fordeduction purposes? The answer generally is no. This is affirmed by these regulations, which require that thegoods or services be provided “at the time” the payment is made, when the donor receives or expects to receivea benefit. In this instance, the donors did not receive or expect to receive a dinner or anything else at the timeof their gifts. But suppose a charitable organization develops a regular pattern of providing these after-the-factbenefits. At what point do expectations arise? This is probably not something the regulations can further address;it may have to be left to a facts-and-circumstances analysis. The regulations observe, however, that thebenefit can arise in a year other than (usually, subsequent to) the year of the gift. 589