‘Tis the season! Someone was feeling the holiday spirit after winning big on an instant lottery ticket on Thursday, December 8. But rather than pocket the cash, the lucky winner donated the winnings to charity by dropping the winning ticket into a Salvation Army collection kettle. The kettle, like those you might see on the sidewalk, was located outside of a Walmart in Erie, Pennsylvania.
The winning ticket was worth $1,000. It was an instant game “Fantastic 10s” ticket – what you and I would call a “scratch-off” ticket. According to the PA Lottery website, “Fantastic 10s is a $10 game… When any of YOUR NUMBERS match any WINNING NUMBER, win prize shown under the matching number.”
The ticket was so valuable that Major Leslie Walter of the Erie Salvation Army wasn’t sure what to make of it, saying, “I really had a hard time believing it.” A colleague advised that he could check the legitimacy of the ticket by putting it in the machine, so they did – three or so times.
While the company has received smaller tickets before – usually a dollar or two, according to Walter – a ticket of this size is pretty unusual. It’s also much appreciated since donations are down this year by nearly $20,000. A host of factors may be to blame, including the economy, but there’s another, more surprising culprit: the weather. It’s hard, Walter notes, to raise money when it’s cold and raining outside since foot traffic is down.
The lack of funds makes it more difficult to administer programming at the center, including providing gift cards for the holiday seasons for over 4,000 families to use to buy groceries.
Walter is hoping to make up the difference in the next few days. Donations often peak at the end of the year as taxpayers seek to maximize deductions. The tax benefit is a significant reason for making charitable deductions: in 2012, more than two-thirds of high-net-worth donors said they would decrease their charitable giving if they did not receive a corresponding tax deduction.
Interestingly, the donor of the lottery ticket won’t be able to claim a tax deduction for his or her generosity because the taxpayer failed to get a receipt. Cash donations, regardless of the amount, must be substantiated by a bank record (such as a canceled check or credit card receipt, clearly annotated with the name of the charity) or in writing from the organization. Donations of non-cash items must also be substantiated: you can generally take a deduction for the fair market value of the items, or what the item would sell for in its current condition, but you’ll want to be able to establish an appropriate value – depending on the item and the amount, you may also need an appraisal.
The value of the ticket is another issue: I was curious as to whether the donor knew the full value of the ticket before making the donation. Walter says that the ticket was already scratched, meaning that the donor knew it was a winning ticket worth $1,000 when the donation was made. If the ticket had not been scratched, I’d argue the value of the donation was less. Typically, the fair market value of an item is defined as what a willing buyer would pay. What would you pay for a $10 lottery ticket that may or may not be a winner? My guess? $10.
With a Fantastic 10 ticket, winnings could have been as high as $300,000. While Walter was thrilled with the $1,000, he couldn’t help but chuckle. If the ticket had been for the top prize, he says, “We could have closed our kettles down for the day.”
If you’d like to help out the Erie Salvation Army, you can send a donation to 1022 Liberty Street, Erie, PA, 16502, or call 1-800-SAL-ARMY (725-2769).
For more tips on making your tax-deductible charitable contribution count, click here.
