Charitable Contributions
Charitable contributions are deductible only if the donor itemizes deductions on her tax return. Although it is a donor’s responsibility to obtain a written acknowledgement of charitable donations to your class, club, or group, you can assist by providing timely, written acknowledgement of all donations.
Acknowledgements may be provided by email or on paper. To be considered timely, it must be received by the date the donor files her tax return. The rule of thumb is to send written acknowledgements at the time a donation is made, or no later than January 31 of the year following a donation.
Cash Contributions Of $250 Or Less
You can either send an acknowledgement for each contribution or one for all contributions during a calendar year. Acknowledgments must include:
- Name of your group
- Date of the contribution
- Amount of each cash contribution.
Example cash donation:
Thank you for your cash contribution of $100, which the MHC Club of Cape Cod received on September 20, 2012. The Cape Cod Club is classified by the IRS as a 501(c)(3) nonprofit organization. No goods or services were provided in exchange for your donation. Consult your tax advisor to determine if your donation is eligible for a tax deduction. Please retain this letter as your documentation.
Example recognizing goods or services:
Thank you for your cash contribution of $100, which the MHC Club of Cape Cod received on September 20, 2012. In exchange for your contribution, you were provided lunch with an estimated fair market value of $25. The Cape Cod Club is classified by the IRS as a 501(c)(3) nonprofit organization. Consult your tax advisor to determine if your donation is eligible for a tax deduction. Please retain this letter as your documentation.
Cash Contributions Of $250 Or More
Contributions of $250 or more require additional information. The contribution may be a single contribution or several contributions that total $250 or more. The acknowledgement can be provided in one of two ways. You can send a separate acknowledgement for each contribution at the time it is made, or you may send one acknowledgement that lists the date, total of each contribution, and the grand total of all contributions. Acknowledgments must include:
- Name of your group
- Date of the contribution
- Amount of cash contribution
- Whether any goods or services were provided as a result of the contribution (other than certain token items and membership benefits). You can include a statement that “no goods or services were provided” by the group in return for the contribution, if that was the case.
- If goods or services were provided in exchange for the contribution, include a description and a good faith estimate of the value of what was provided.
Example cash donation:
Thank you for your cash contribution of $300, which the MHC Club of Cape Cod received on September 20, 2012. The Cape Cod Club is classified by the IRS as a 501(c)(3) nonprofit organization. No goods or services were provided in exchange for your donation. Consult your tax advisor to determine if your donation is eligible for a tax deduction. Please retain this letter as your documentation.
Example recognizing goods or services:
Thank you for your cash contribution of $330, which the MHC Club of Cape Cod received on September 20, 2012. In exchange for your contribution, you were given a cookbook with an estimated fair market value of $30. The Cape Cod Club is classified by the IRS as a 501(c)(3) nonprofit organization. Consult your tax advisor to determine if your donation is eligible for a tax deduction. Please retain this letter as your documentation.
Noncash Contributions Of $250 Or Less
These require an acknowledgment including:
- Name of your group
- Date of the contribution
- A reasonably detailed description of the property
Example:
Thank you for your donation of two blue MHC china dinner plates, which the MHC Club of Cape Cod received on September 20, 2012. No goods or services were provided in exchange for your donation. The Cape Cod Club is classified by the IRS as a 501(c)(3) nonprofit organization. Consult your tax advisor to determine if your donation is eligible for a tax deduction. Please retain this letter as your documentation.
For more information refer to IRS Publication 526, Charitable Contributions.
