Rob Ford Crack Video: Give the Money Back, Gawker! Where’s my Canadian Tax Deduction?
Unless you’ve been completely isolated over the past week, you know that both the Toronto Star and the media news and gossip site Gawker have reported that they have seen a portion of a video that allegedly shows Toronto mayor Rob Ford smoking crack cocaine.
You also know that the owners of this video have requested $200,000 in return for a copy of the entire video and that Gawker has been using the crowdfunding website Indiegogo.com to solicit donations from the public for their own “Crackstarter Campaign” in an effort to raise the funds to buy the video and publish it for all to see.
However, on Thursday, May 24, 2013, at 6:10 p.m. EST, Gawker editor John Cook posted that the site’s plan to obtain the video had hit a snag: the people who owned the video had apparently gone off the grid.
“The last time we established contact with the people who are in possession of the video was this past Sunday, and we have not been able to reach them since,” he wrote, mentioning that though they had been in constant contact with the tipster who initially connected them with the owner of the video, the tipster had been unable to get a hold of the video’s owner in recent days.
In the same post, Cook outlined Gawker’s plan if the $200,000 campaign is funded before the deadline but they still cannot track down the video to purchase it.
“If we end up meeting that goal and fail to consummate this transaction, we will—as we promised at the outset—donate the proceeds to a Canadian nonprofit that addresses substance abuse issues. We haven’t figured out which one yet, but I’m sure we’ll be able to select a worthy one.”
The possibility that they may lose contact with the owner of the video (on account of the obvious unreliability of drug dealers) was an outcome Gawker outlined from the outset of the campaign — even before they eventually did lose contact with them — and donating the funds to a Canadian non-profit was always the fallback plan. But, if they do end up donating the funds to a Canadian substance abuse charity, who receives the tax deduction, Gawker or the people who funded the campaign? And would a tax receipt even have to be produced?
We asked Michael Storoszko, the principle accountant at Toronto’s Storoszko & Associates, for the answer.
“The charity that receives the donation must be Canadian and it would be up to them to issue the tax receipts to the individuals,” says Storoszko. He adds that if the charity decides to issue tax receipts, Gawker would need to provide the name and address of every donor and the amount that each of them donated.
Since the contract between Gawker and the donors was originally for Gawker to act as an intermediary in a buy/sell agreement to purchase the tape, unless the charity decides to issue tax receipts, there will be nothing for the donors.
“If the donors request a tax receipt, ethically, Gawker should inform the charity,” says Storoszko. “But to be fair, Gawker should refund the money to the donors, as they did not complete the transaction they intended to do.”
For the record, the donors have a right to ask for their money to be refunded since the original intention of the deal would have fallen through. However, since Gawker is a U.S. company, Storoszko says there is nothing legally in Canada to stop them from doing whatever they wish with the money. However, if the donor used Paypal or a credit card to complete their transaction, those people do have the ability to get their money back.
LSM’s Take on the Rob Ford Crackster Fund: It seems morally wrong to arbitrarily donate someone’s money to a charity of Gawker’s choice, when the original intention was to use that money to help purchase a video, especially when you don’t know if the funders are the giving type or would support such a donation. What Gawker really should be doing is giving the money back to the backers if the video cannot be purchased. If Gawker’s motivations are truly altruistic, why not match the contributions of its pledgers in the form of a charitable donation themselves? If the $200,000 target is not hit before the deadline, why not refund the money to the pledgers and still match them dollar for dollar in the form of a charitable donation? This would be a real show of good will and everyone would go home at the same point they were at when this proposed fund began.