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Charitable Contributions – Substantiation And Disclosure
A public charity should be aware of the substantiation
and disclosure rules imposed on donors of charitable
contributions and the disclosure rules imposed on charities
that receive certain quid pro quo contributions.
Recordkeeping Rules
A donor cannot claim a tax deduction for any cash,
check, or other monetary contribution made on or after
January 1, 2007, unless the donor maintains a record
of the contribution in the form of either a bank record
(such as a cancelled check) or a written communication
from the charity (such as a receipt or a letter) showing
the name of the charity, the date of the contribution,
and the amount of the contribution.
Substantiation Rules
A donor cannot claim a tax deduction for any single
contribution of $250 or more unless the donor obtains
a contemporaneous acknowledgment of the contribution
from the recipient public charity. A public charity
may assist the donor by providing a timely written
statement including the name of the public charity, date
and amount of the contribution and description of any
non-cash contributions.
In addition, the acknowledgment should indicate
whether any goods or services were provided in return
for the contribution. If any goods or services were
provided in return for a contribution, the organization
should provide a good faith estimate of the value of
goods or services provided in return for the contribution.
The public charity may either provide separate
acknowledgments for each single contribution of $250
or more or one acknowledgment to substantiate several
single contributions of $250 or more. Separate
contributions are not aggregated for purposes of measuring
the $250 threshold.
Disclosure Rules That Apply to Quid Pro Quo Contributions
Contributions are deductible only to the extent that
they are gifts and no consideration is received in
return. Depending on the circumstances, ticket purchases
and similar payments made in conjunction
with fundraising events may not qualify as charitable
contributions in full. A contribution made by a donor in
exchange for goods or services is known as a quid pro
quo contribution. A donor may only take a charitable
contribution deduction to the extent that the contribution
exceeds the fair market value of the goods and services
the donor receives in return for the contribution.
If a public charity conducts fundraising events such as
benefit dinners, shows, and membership drives, where
something of value is given to those in attendance, it
must provide a written statement informing donors of
the fair market value of the specific items or services
it provided in exchange for contributions. Token items
and services of intangible religious value need not be
taken into account. A public charity should provide the
written disclosure statement in advance of any event,
determine the fair market value of any benefit received,
and state this information in fundraising materials such
as solicitations, tickets, and receipts. The disclosure statement
should be made, at the latest, at the time payment
is received. Subject to certain exceptions, the disclosure
responsibility applies to any fundraising circumstance
where each complete payment, including the contribution
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