Nonprofit Resources
Gift Week: Charitable Receipting
Situation GW01:
A married couple, Charles and Kathy, committed to give $200 a month to their favorite charity, Fishing Lessons, Inc. (FSI). FSI is a public charity under Internal Revenue Code section 501(c)(3). For the 2014 tax year, their contributions totaled $2,400 and no check was more than $200. FSI is not required to give them any type of receipt if each contribution is less than $250. However, it is a best practice for an organization to provide an annual statement to all donors. Charles and Kathy should keep copies of cancelled checks as their “backup” for any tax deductions.
**IRS: A donor must have a bank record or written communication from a charity for any monetary contribution before the donor can claim a charitable contribution on his/her federal income tax return.
From IRS Publication 1771, “Charitable Contributions”:
A donor cannot claim a tax deduction for any single contribution of $250 or more unless the donor obtains a contemporaneous, written acknowledgment of the contribution from the recipient organization. An organization that does not acknowledge a contribution incurs no penalty; but, without a written acknowledgment, the donor cannot claim the tax deduction. Although it is a donor’s responsibility to obtain a written acknowledgment, an organization can assist a donor by providing a timely, written statement containing the following information:
- Name of organization
- Amount of cash contribution
- Description (but not the value) of non-cash contribution with a statement that no goods or services were provided by the organization in return for the contribution, if that was the case.
OR
- Description and good faith estimate of the value of goods or services, if any, that an organization provided in return for the contribution with a statement that goods or services, if any, that an organization provided in return for the contribution consisted entirely of intangible religious benefits (described later in Publication 1771), if that was the case.
It is not necessary to include either the donor’s Social Security number or tax identification number on the acknowledgment.
A separate acknowledgment may be provided for each single contribution of $250 or more, or one acknowledgment, such as an annual summary, may be used to substantiate several single contributions of $250 or more. There are no IRS forms for the acknowledgment. Letters, postcards, or computer-generated forms with the above information are acceptable. An organization can provide either a paper copy of the acknowledgment to the donor, or an organization can provide the acknowledgment electronically, such as via an e-mail addressed to the donor. A donor should not attach the acknowledgment to his or her individual income tax return, but must retain it to substantiate the contribution. Separate contributions of less than $250 will not be aggregated. An example of this could be weekly offerings to a donor’s church of less than $250 even though the donor’s annual total contributions are $250 or more.
