Not-for-Profit Enews Update: 2014 Thresholds for Insubstantial Benefits

January 30, 2014

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Seasoned fundraisers know that the deductible portion of a contribution is calculated by reducing the total amount of the payment by the value of any consideration or benefit received. Such transactions are known as quid-pro-quo contributions.

The classic example of a quid-pro-quo transaction is a charitable dinner where the price of admission is $100. The $100 payment entitles the donor to a meal. The cost of the meal to the charity is $30. The deductible portion of the total $100 admission price to the donor is therefore $70.

Benefits received need not affect the deductible portion of a contribution if the benefits are deemed insubstantial. The IRS guidelines for insubstantial benefits for 2014 are as follows:

1. The fair market value of all the benefits received cannot be more than the lesser of $104 or 2% of the total contribution. (This is up from $102 in 2013.)

2. The contribution is at least $52 and the only items provided to the donor bear the organization's name or logo, and the cost of these items is within the limit for "low-cost articles." Low-cost articles are those that do not exceed $10.40 for 2014. (This is up from $10.20 for 2013.)

3. In connection with a campaign, the benefits are distributed to potential donors who neither requested nor expressly consented to receiving them, and their cost is no more than the low cost article value of $10.40.

If you have any questions regarding the article above or any other issue affecting your not-for-profit organization please contact your Blue & Co. advisor or e-mail us at or call us at 800-717-BLUE.