The DNAinfo archives brought to you by WNYC.
Read the press release here.

$2M Scholarship Fund For Slain Cop's Daughters Threatened by Tax Snafu

By Murray Weiss | February 28, 2012 7:02am

MANHATTAN — A tax snafu by the NYPD Police Foundation means the more than $2 million donated to the daughters of murdered NYPD Officer Peter Figoski might not actually reach the young women, DNAinfo has learned.

Roughly 12,000 donors gave to the Officer Peter Figoski Scholarship Fund to pay for the college educations of the shot cop's four daughters. The well-intentioned Foundation told donors their contributions would be tax deductible — a mistake as a charitable trust for individuals cannot provide tax breaks.

“You can’t just start a fund and say it is tax deductible,” a law enforcement source said. “It may have been well intentioned, but it was incorrect.

"They should have just said ‘Please contribute to the family’s well being,' and not say it was tax deductible and only for education purposes.”

As a result, the Foundation sent letters, copies of which were obtained by "On the Inside," that ask donors how they want their money to be used — even giving them the option to have it returned — without giving a hint about the behind-the-scenes tax code fumble.

The "Peter Figoski Scholarship Fund Acknowledgement Letter," dated Feb. 21, says that "a trust is being established for the exclusive benefit of Officer Figoski's four young daughters to ensure that his daughters' future financial needs will be met, including but not limited to their educational expenses."

It then asks donors to choose from three options. One would have the donation directed to the trust; a second would send the money to a general fund that helps pay educational costs for all children of slain cops; and the third would return the funds to the donor.

Only the second option, for the general scholarship fund, allows for a tax deduction, the letter says.

A separate letter went to 82 private foundations that contributed at least $200,000 to the Figoski fund.

"We understand that private foundations cannot send grants directly to individuals for educational purposes unless the IRS has pre-approved the foundation's procedures and the foundation follows those procedures," the second letter says.

"We do not know if your foundation has such pre-approved procedures or can make grants to indivuduals."

The letter offers two options — putting the money into the expanded "scholarship" fund or to have the gift returned.

Both letters ask for a response by March 16.

Figoski’s daughters learned of the Police Foundation's problems when they asked for a list of donors to send "Thank You" notes, sources said.  They were told they could not have a list until the Police Foundation heard back from donors about how they wanted their money used.

"The girls recognize that this is a bump in the road compared to having to deal with the loss of their father,” a source familiar with the Figoski family said.

Figoski, 47, a 22-year NYPD veteran, was shot in the face and died on Dec. 12 when he responded to a home robbery in East New York. Days later, Police Commissioner Raymond Kelly announced the Foundation was creating the scholarship fund.

For decades, the NYC Police Foundation has helped underwrite NYPD programs ranging from buying bulletproof vests to funding detectives in foreign countries. But overseeing a fund for a slain officer's family was a challenge they had never before undertaken.

In addition to the tax issues, there's another sticking point with the Figoski fund — the daughters will likely never need $2 million for their schooling, which leaves another quandary of what to do wiith the unused cash.

Two of Figoski’s children, Christine, 20, and Caitlyn, 18, attend state universities. Their tuition now will be waived because of what happened to their hero dad.

And there are other foundations that provide education funds for families of slain cops and firemen that could donate tens of thousands of dollars for Christine and Caitlyn and their younger sisters, Caroline, 16 and Corinne, 14.

“The intention of everyone who gave was to help the chilldren,” a source said. “We hope that will still prevail.”

A spokesman for the Police Foundation said in a statement that it "will continue to work with the Figoski daughters in the weeks and months to come, to continue to honor their father and ensure the seamless transmission of funds, which will help the girls move forward with their lives."