2015 Thresholds for Insubstantial Benefits

By Josh Howells – Staff Accountant

Typically, the deductible portion of a donor's contribution is reduced by the fair market value of goods or services (benefits) received in exchange. Such transactions are known as quid-pro-quo contributions. These transactions often arise when not-for-profit organizations hold events like fundraising gala dinners, auctions, or golf outings, in which the donor is receiving something of value in return for their contribution to the organization.

However, if the benefits provided are deemed insubstantial under Revenue Procedures 90-12 and 92-49, then the benefit can be ignored, thus allowing the donor to take a full deduction for the contribution. The updated IRS guidelines to determine if the benefits are insubstantial are as follows:

The fair market value of all benefits received is not more than the lessor of $105 for 2015 (inflationary-adjusted from $104 in 2014) or 2% of the contribution.

For example, an individual donates $1,000 to an organization and receives a calendar with a deemed value of $5 in return. The gift is considered insubstantial because the calendar’s fair market value is below $105 total and below 2% of the $1,000 contribution.
The contribution is at least $52.50 for 2015 (inflationary-adjusted from $52.00 in 2014), and the cost of the benefits received is no more than the low cost article value of $10.50 for 2015 (inflationary-adjusted from $10.40 in 2014).

For example, a not-for-profit organization is holding a fundraising campaign in which it will give a coffee mug for every $50 contribution. The cost of the mug to the organization is $7.00 and its fair market value is $11.00. The gift is considered insubstantial because the total contribution is below $52.50 and the low cost article value of the coffee mug is below the $10.50 threshold.
In connection with a fundraising campaign, the benefits are distributed free 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 $10.50 for 2015.

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