Is alum entitled to take credit for gift that cost him nothing?

A reader we're calling Alan regularly donates money to various nonprofit enterprises including the undergraduate college he attended. A former employer used to match donations Alan made up to a certain amount each calendar year, but his current employer has no such matching program.

Nevertheless, Alan has some discretionary money to spend in his new position. If he decides, for example, to buy lunch for a group of students from his alma mater, his company will reimburse him from his discretionary account. It's not entirely an altruistic move since Alan believes his company sees such gestures as a way of recruiting future potential employees to his organization.

Months after Alan hosted about a half-dozen students from his undergraduate college for an informal lunch and tour of his organization, an official from the college contacted Alan and asked him if he could submit his receipts so the college could acknowledge a gift in kind and supply him with "gift credit and a tax letter."

Alan responded by letting the official know he hadn't hosted the students to get any kind of credit.

"Of course not," the official responded, "but it helps our alumni participation number."

Colleges keep track of the percentage of alumni who donate as a way, among other things, of indicating to larger potential donors how engaged alumni remain with the institution.

Now Alan is torn. He'd like his college to include his effort among those of other alumni if it would help, but because he was reimbursed for the cost from the discretionary spending account his company gives him, he doesn't believe he is entitled to a tax credit. What, he wonders, is the right thing to do?

I am not a tax specialist nor am I up to date on all the ramifications of charitable giving deductions under the most recent tax legislation. Alan is right to pause, however, before considering claiming an expense on his tax forms for which he is ultimately repaid by his employer. If Alan were using his own salary to pay for that lunch with students, he shouldn't hesitate to consider the deduction possibility. But that does not appear to be the case here. Instead, it's his company that appears to be footing the bill.

The right thing is for Alan to let the college official know that the expense he incurred in feeding the students was reimbursed by his organization. The official can let Alan know if this still qualifies as alumni participation. If it does, he can also let Alan know what kind of documentation the college needs to verify the expense.

Even if the expense hadn't been reimbursed by his company, Alan would not be obliged to claim it on his taxes as a charitable contribution nor does he have to seek credit for the alumni participation. Alan has every right to give to a cause he cares about whether he receives credit for that giving.

Of course, if Alan chooses not to have this incident recorded by the college, he can expect further calls from the official or someone else reminding him he hasn't made his annual contribution and encouraging him to do so. Whether or not he does is also entirely up to Alan. 

Jeffrey L. Seglin, author of The Simple Art of Business Etiquette: How to Rise to the Top by Playing Nice, is a senior lecturer in public policy and director of the communications program at Harvard's Kennedy School. He is also the administrator of www.jeffreyseglin.com, a blog focused on ethical issues. 

Do you have ethical questions that you need answered? Send them to rightthing@comcast.net. 

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