With the end of the year approaching, many not-for-profits see an increase in giving. Therefore, we thought it would be helpful to provide a brief summary of donors’ documentation requirements for tax-deductible gifts and what not-for-profits can provide to donors to assist in fulfilling these requirements.
The Internal Revenue Service has provided documentation requirements for charitable contributions. According to IRS Publication 1771, Charitable Contributions – Substantiation and Disclosure Requirements, a not-for-profit is required to provide a written disclosure to a donor who receives goods or services in exchange for a single payment in excess of $75. Additionally, while a not-for-profit that does not acknowledge a contribution incurs no penalty, a donor cannot claim the tax deduction for any single contribution of $250 or more without such acknowledgment. Although it is the donor’s responsibility to obtain the acknowledgment, the not-for-profit can assist the donor by providing a written statement containing the following:
- The name of the not-for-profit
- The amount of cash contribution
- A description (but not the value) of a non-cash contribution
- A statement that no goods or services were provided by the not-for-profit in return for the contribution, in such cases
- A description and good faith estimate of the value of goods or services, if any, that a not-for-profit provided in return for the contribution
- A statement that goods or services, if any, that a not-for-profit provided in return for the contribution consisted entirely of intangible religious benefits, if that was the case
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. The acknowledgment can either be provided in paper or via email.