In order for donors to Give It Away to your organization and get credit from the IRS in the form of a charitable contribution deduction, you must provide donors with a written contemporaneous acknowledgement of the donation.
For donations received with a value of $250 or more, the charitable organization is required to provide the donor with a written contemporaneous acknowledgment containing the following:
- Organization s name.
- Amount of cash contribution or description (but not value) of the noncash contribution.
- Statement that no goods or services were provided by the organization, if applicable.
- Description and good faith estimate of the value of goods or services, if any, provided in return for the contribution.
Additional substantiation requirements apply for noncash contributions. If the value of the donated property exceeds $5,000, the donor must get a qualified appraisal for contributions of property (other than money or publicly traded securities). In addition, if any charitable deduction property is sold by the charitable organization within three years of the contribution, the organization must file Form 8282, Donee Information Return, within 125 days of the disposition.
In addition to the $250 threshold, charitable organizations must provide a written disclosure statement to donors of a quid pro quo contribution in excess of $75. A quid pro quo contribution is a payment made to a charity by a donor partly as a contribution and partly for goods or services provided to the donor by the charity. For example, if a donor gives a charity $100 and receives a concert ticket valued at $40, the donor has made a quid pro quo contribution. In this example, the charitable contribution portion of the payment is $60. Even though the part of the payment available for deduction does not exceed $75, a disclosure statement must be filed because the donor’s payment (i.e., quid pro quo contribution) exceeds $75. The required written disclosure statement must:
- Inform the donor that the amount of the contribution that is deductible for federal income tax purposes is limited to the excess of any money (and the value of any property other than money) contributed by the donor over the value of goods or services provided by the charity.
- Provide the donor with a good faith estimate of the value of the goods or services that the donor received.
The charity must furnish the statement in connection with either the solicitation or the receipt of the quid pro quo contribution. If the disclosure statement is furnished in connection with a particular solicitation, it is not necessary for the organization to provide another statement when the associated contribution is actually received.
A penalty is imposed on a charity that does not make the required disclosure of a quid pro quo contribution of more than $75. The penalty is $10 per contribution, not to exceed $5,000 per fund-raising event or mailing. The charity can avoid the penalty if it can show that the failure was due to reasonable cause.
If you have questions about any of the information presented above, please contact the expert listed below at PYA, (800) 270-9629.
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WE ARE REQUIRED BY IRS CIRCULAR 230 TO INFORM YOU THAT THE FOLLOWING DISCUSSION WAS NOT INTENDED OR WRITTEN TO BE USED, AND IT CANNOT BE USED, NOR RELIED UPON, BY ANY TAXPAYER FOR THE PURPOSE OF AVOIDING ANY PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW. THE ADVICE WAS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED IN THE DISCUSSION. EACH TAXPAYER SHOULD SEEK ADVICE BASED ON ITS PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
