I’ve run across situations recently where donors to charitable organizations feel ripped-off when their accountant or tax preparer (during tax filing season) told them that they would not benefit from a tax deduction they made in the prior tax year.
This creates tension, undermines the goodwill that the charitable organization has built and, even worse, opens the door to a possible legal claim against the charitable organization and its leadership. While I have no specific knowledge of this, I would not be surprised to learn that this is a common type of claim against Officers and Directors insurance policies. I’ve even read stories from tax preparers of how some individuals followed a “kill the messenger” mentality and did not believe the advice of the tax preparer. It is inappropriate for charitable organizations to project the benefits of tax deductions as part of their effort to generate contribution.
The message is short, simple and clear: Leaders of charitable organizations should not offer tax advice to donors. That’s all to say on this topic.