Volunteers Have Worries Too
Your land trust not only has to comply with laws to protect land and to help donors understand their obligations, but now your land trust also must do the same for volunteers. A volunteer lost a deduction by not documenting expenses properly. See how the Federal Volunteer Protection Act applies to your land trust volunteers.
What this Case Means for Land Trusts
The Van Dusen v. Commissioner, 136 T.C. No. 25 (June 2, 2011) case is of concern to both land trusts and volunteers but you can do a few things to make it less troubling. The volunteer and not the land trust should be responsible for tracking expenses and presenting those expenses to the land trust. All expenses submitted should be itemized and clearly documented as solely for the benefit of the land trust. The land trust should officially designate an appropriate party to receive the documentation from volunteers, such as the board treasurer if the land trust has no staff, who would then check the documentation for obvious errors such as an expense that is obviously not connected to land trust work. The land trust must look for any obvious errors or expenses not for the benefit of that land trust.
The land trust can then issue the required contemporaneous written acknowledgement letter for any expenses in excess of $250 not reimbursed by the land trust, consistent with the judge’s comments in Van Dusen. The land trust is not required to track volunteer expenses. Please note a technicality: the $250 threshold is for individual expenses, not cumulative expenses. A $249 airfare to attend Rally does not require the "no goods and services" letter for example. It is only individual expense items of $250 or more that require that extra documentation.
Van Dusen, cat enthusiast and volunteer for Fix Our Ferals, a 501(c)(3) organization that neuters and fosters feral cats, sought a tax deduction for her costs associated with long-term foster care of approximately 80 feral cats, which she provided from her private residence. She claimed numerous out-of-pocket expenses in excess of $250 directly tied to the charity Fix Our Ferals, but lacked specific documentation of exact expenses and did not obtain the required contemporaneous written acknowledgment from an officer of the all-volunteer, loosely organized charity. The court, however, found that Van Dusen’s individual expenses of less than $250 each were allowable deductions under the substantial compliance doctrine because she substantially met the documentation requirements, which are either a cancelled check, a receipt from the charitable organization outlining the contribution or other reliable written records of a transaction, as stipulated in section 1.170A-13(a)(1).
Individual expenses of $250 or more, however, were not found to be deductible, because Van Dusen failed to produce a contemporaneous written acknowledgment from Fix Our Ferals, as required by section 170(f)(8)(a).
Send Contemporary Written Acknowledgment Letters!
For a nonprofit organization and a donor, the significance of both providing and seeking an acknowledgment letter continues to be critical. If you do not already send contemporaneous written acknowledgments for all charitable donations, see these guidelines here to protect your organization and your donors. This holding may be significant for land trusts that rely heavily on volunteers and do not routinely reimburse their expenses. There may be a need for additional paperwork to substantiate volunteer out-of-pocket expenses of $250 or more. Remember that professional services are not tax deductible.
In Van Dusen v. Commissioner, The court also briefly discussed the definition of a charitable contribution and cited three types of gifts including cash and property (whether direct, in trust or for the use of the charity), unreimbursed expenses and other legal rights.
Federal Volunteer Protection Act
Volunteers can also be vulnerable to lawsuits for negligence, so having the right training and support from the land trust is critical. While federal law and state statutes provide some protection, the statutes lack uniformity and consistency. State legislatures try to balance protecting volunteers with assuring compensation to innocent victims. Only about half the states protect any volunteers other than directors and officers. Every volunteer protection statute -- even the federal statute -- has exclusions; the most common are based on a volunteer’s willful or wanton misconduct. Several laws also exclude gross negligence or another category of error above negligence.
Under the federal statute, one of the key exceptions is where a volunteer performs an activity that falls outside of the job description. While valuable, the intent of volunteer protection laws is to limit liability if a claim falls within the scope of the protection, but they do not prevent the volunteer from being sued. The statute and various articles are posted in the Clearinghouse collection under Federal Volunteer Protection Act. Learn more on the Council of Foundation's website and the Public Entity Risk Institute's website.
The land trust can also help volunteers by ensuring that they stay within the bounds of their roles and follow organizational policies. Use this resource to find the right software to track contact info, schedules, time sheets and work locations, freeing time to build loyalty to the mission and to provide sufficient supervision.
In addition to having appropriate oversight of volunteers, land trusts should carry both general liability and directors & officers insurance coverage to provide a financial backstop when there is litigation concerning a land trust’s volunteers activities. Volunteer coverage is also recommended.