[Hillary Murphy]

Is there anyone out there (especially a hospital) that has an active program of letting their employees donate PHOs or PDOs (Paid Hours Off / Paid Days Off) to your non-profit? We are meeting with our HR dept tomorrow about this. Back right after 911 and Katrina the IRS relaxed the rules governing this so many businesses were able to make substantial contributions by their employees for unused sick/vacation days. Donors couldn't take charitable deduction BUT the amount of the donation never hit their W-2 either so it was a wash.

We want to implement PHO donation equivalent at our hospital now and know the employee will see the hours donated as income on their W-2 statements but the employee also may take a deduction if they itemize.

We want to know any challenges this program has given your org.

Thanks for your time!
Hillary Murphy
Phoebe Foundation

[kspitler]

I am a bit confused. Can you explain a little bit more about which employee gets to deduct what from their taxes?

My thought is that the employee that is accepting the donation will have to pay the same taxes they usually would on their income. The employee that is donating the hours would not have any decuction because he/she is directing the benefit to a specific individual.

Kind of the same idea that you can not deduct a gift that went to benefit a specific patient. (i.e. you can't deduct the amount you pay for your neighbors hospital stay)

[Hillary Murphy]

Oh....No...The employee would not be donating their vacation days to another employee.....I left an important part out. They would be donating their pay equivalent to our capital campaign. Very similar to what was done by many orgs right after 911 and Katrina disasters. The difefrence now is that they would accept the donated days as income on their W-2 but IF they itemize they would eligible for a tax deduction as allowed by the law. I'm wondering what implications it has had on other hospital's HR dept and their budgeting process. We know how it works on our end. We are just concerned with pursuading our HR dept that this is a good thing to do (unless someone out there has a good reason they have chosen not to do this).

Thanks

[Melissa Siobhan]

I would suggest you post this on the listserv on Fundsvcs.org -. I'm sure the professionals there have seen this.

[Hillary Murphy]

Thanks...That was my next stop. I searched the archives and one consultant said he had never heard of this being done. That surprised me because I think it's fairly common. I will check again because the archived info was afew years old.

[Don Sabo]

We did this for our capital campaign. On the form they could select an amount to be deducted every month or so many hours of their pay per pay period. If they were making $10 an hour and selected 2 hours per pay period then they would donate $20. I got an Excel file from payroll and I changed the constituent id to match what their employee id was and did a quarterly import into RE. You want to make sure that if an employee quits or cancels his pledge that you do not write off the pledge until after you have posted the last quarters records. I could check with our accountant to see how the tax rules were supposed to be done by using this method.

[Don Sabo]

I talked to our accountant and she said that on each person's pay stub there is a total of the employee's deductions, Capital Campaign, United Way, etc. So the employee can use this as their documentation for tax purposes.

[Tcassi]

Quote:

Originally Posted by Hillary Murphy

Oh....No...The employee would not be donating their vacation days to another employee.....I left an important part out. They would be donating their pay equivalent to our capital campaign. Very similar to what was done by many orgs right after 911 and Katrina disasters. The difefrence now is that they would accept the donated days as income on their W-2 but IF they itemize they would eligible for a tax deduction as allowed by the law. I'm wondering what implications it has had on other hospital's HR dept and their budgeting process. We know how it works on our end. We are just concerned with pursuading our HR dept that this is a good thing to do (unless someone out there has a good reason they have chosen not to do this).

Thanks

Hillary - We are currently doing this for our employee giving campaign. I cannot think of any obstacles we had with HR when setting this up; other than them providing us the data on a be-weekly basis when payroll goes out. We did not have to convince them that it was a good idea...more like they had to convince us! We set up an elaborate Action in RE to track all the details of the gift. Our biggest concern was tracking the gifts when 2 spouses made separate gifts. I am not aware of any tax implications that affected the process?

[cseebald]

Quote:

Originally Posted by Hillary Murphy

The difefrence now is that they would accept the donated days as income on their W-2 but IF they itemize they would eligible for a tax deduction as allowed by the law. I'm wondering what implications it has had on other hospital's HR dept and their budgeting process. We know how it works on our end. We are just concerned with pursuading our HR dept that this is a good thing to do (unless someone out there has a good reason they have chosen not to do this).

I know this doesn't answer your original question but...: Since "the employee will see the hours donated as income on their W-2 statements," I assume this is being handled much the same as a payroll deduction program and is doable. However, it seems unnecessarily complicated to me for several reasons. So, I personally think that it would be much cleaner and simpler to instead focus on a payroll deduction program or to ask employees to donate - either via payroll deduction or a cash donation - the equivalent of a # of paid hours or paid days. But, then, that's just my opinion....

Even if you already put the basic process in place after 9/11 or Katrina, I'd strongly recommend making sure that everything is "kosher" on the payroll and accounting end.

-

[Melissa Siobhan]

What I question is how it appears on their pay stub - is their PTO paid out to them as income? (thus reducing their PTO total?) and then the equivalent is taken out of the final paycheck as a donation?

I agree that it might be easier to offer simple payroll deduction but if you work somewhere like I do which gives a ridiculous amount of PTO (you start at 5 weeks a year + 12 sick days) and employees are constantly losing time not taken - to be able to make that "loss" a tax deductible contribution would be great. I would think that the policy should have a cap so that you still are required to hold a certain amount of time to take (for your health and sanity) but to be able to donate a certain number of days would be good in some places.

I doubt we can get it in place for staff to be able to donate before June 30 but I hope to be able to start a program like this next year.

[andrea.bbbs]

5 Weeks Vacation and 12 Sick days?????!!!!!!

OMG!!!!!!!

[Melissa Siobhan]

Quote:

Originally Posted by andrea.bbbs

5 Weeks Vacation and 12 Sick days?????!!!!!!

OMG!!!!!!!

Disgusting, eh? Anyone question why I took my new job?

[andrea.bbbs]

We have to be at our job 11 years to get 5 weeks!!!! (Only 10 more years to go....)

[Hillary Murphy]

Thanks for all the input....HR pretty much decided it wasn't a great idea. There reason was this and it makes sense. It would be fine for hourly employees to do this. Exempt salried employees would have to be excluded because they are given XX hours a year...If they get paid all year and have days left over at the end of the FY AND they decide to donate them, they've essentially received a pay raise....

We opted to leave it alone for now but we have done this several times in the past (911-Katrina-and after recent tornados ripped through SWGA and we donated to Sumter regional hospital-their entire hospital was destroyed!)

We do have an extremely successful employee giving program and have had over $1,000,000 pledged over a three year period. With attrition, folks who drop out and new hires we are well on our way to collecting close to 900,000 of that amount. The PHO or PTO was something we were looking at to further increase revenue for the campaign.