Is donation to alumni association subject to Donation Tax?

Someone asked me, "I have a friend who...

bragged at the stage of Shangrila Makati last Saturday that he donated 2 million pesos to his alumni association. Is he not liable for any donation tax?

My answer is "He is liable for a donation tax of 30%." Even though the alumni association is a non-stock non-profit corporation, but it is not qualified for tax exemption from donor's tax. The association is a stranger. Therefore, the graduated tax table of donation will not apply but the fixed rate of 30%.

Only gifts in favor of an educational and/or charitable, religious, cultural or social welfare corporation, institution, accredited non-government organization, trust or philantrophic organization or research institution or organization, provided not more than 30% of said gifts will be used by such donee for administration purposes.

To qualify for such exemption, the association must be a charitable foundation, not just ordinary non-profit corporation, and should secure the appropriate exemption recognition from the BIR.

Under this exemption, if you donate to Ateneo or CKSC, the donation will be tax exempt. If you donate to the Catholic Church, it will also be tax exempt. However, bible study groups that are not officially registered with SEC and/or BIR would not be allowed such exemption. Donations to charity organizations like Red Cross, GMA Kapuso Foundation, Bantay Bata Foundation, etc. would also be exempt from taxation.

If the donation is to relatives, then the graduated tax table will be followed from 0% below 100,000 to 15% max for above 10 million.

About the person bragging about his 2.0million donation, he has to be careful because it is not just donation tax that BIR can go after him, but also ill-gotten wealth. If his declared income is small, how can he afford to give away 2.0million?

Moral lesson of the story is less talk less mistake, no talk no mistake.