— Please Help
Those In Need! —
Charitable organizations described in section 501(c)(3), other
than testing for public safety organizations, are eligible to receive
tax-deductible contributions in accordance with section 170.
A charitable organization 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 (quid pro quo
contribution) exceeds $75. The required written disclosure statement
must:
1.. 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, and
2.. 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.
No disclosure statement is required when:
1.. The goods or services given to a donor meet the standards
for "insubstantial value" set out in Rev. Proc. 90-12, 1990-1 C.B.
471, and Rev. Proc. 92-49, 1992-1 C.B. 987 (as updated);
2.. There is no donative element involved in a particular transaction with a
charity (for example, there is generally no donative element involved in a
visitor's purchase from a museum gift shop); or
3.. There is only an intangible religious benefit provided to the donor. The
intangible religious benefit must be provided to the donor by an organization
organized exclusively for religious purposes, and must be of a type that
generally is not sold in a commercial transaction outside the donative context.
A penalty is imposed on a charity that does not make the
required disclosure in connection with 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.
Donors taking a deduction under section 170 are required to
obtain contemporaneous written substantiation for a charitable contribution of
$250 or more. To be "contemporaneous" the written substantiation must
generally be obtained by the donor no later than the date the donor actually
files a return for the year the contribution is made. If the donee provides
goods or services to the donor in exchange for the contribution (a quid pro quo
contribution), this written substantiation (acknowledgment) must include a good
faith estimate of the value of the goods or services. The donee is not required
to record or report this information to the IRS on behalf of a donor. The donor
is responsible for requesting and obtaining the written acknowledgment from the
donee. Although there is no prescribed format for the written acknowledgment,
it must provide sufficient information to substantiate the amount of the
contribution. Article reprinted with
permission from irs.gov