RECEIPTING CONTRIBUTIONS

 What must be included on a donor’s receipt?

 Donors are only able to deduct their charitable contributions when contributing to a 501(c)3 organization (such as a church) and if they are able to substantiate the contribution.  Therefore it is advantageous for churches to give receipts to their donors.  A receipt should include the name of the church and the amount and date of the contribution.  The receipt should also include the following statement:  “No goods or services other than intangible religious benefits were provided in exchange for the contribution(s)”.  Although the giving for the year may be added together and reported as one total, individual contributions of $250 or more must be itemized separately.  Refer to IRS Publication 1771 for more information.

 How does a church receipt a non-cash gift?

 According to the IRS churches are not appraisers and should not assign a value to a gift of property.  A donor should be provided with a receipt which includes the name of the church and the date of the contribution.  The receipt should also include a detailed description, but not a value, of the donated property.  When the donated property is a vehicle the church should prepare Form 1098-C and provide a copy to the donor as a receipt.

 What if the donor received Goods or Services in exchange for his gift?

 Organizations are required to provide a written acknowledgment to a donor who receives goods or services in exchange for a payment in excess of $75.  If a donor gives you a gift of $100 in exchange for concert tickets with a fair market value of $40, then you must provide a written acknowledgment because their gift exceeded $75.  The donor will not be able to deduct more than $60.  The written acknowledgment must include the name of the organization, the date and amount of the gift, and the following statement “In exchange for your contribution, we gave you __________ with an estimated fair market value of ____.”  Goods and Services are considered to be insubstantial if (1) the fair market value of the benefit does not exceed 2% of the contribution or $76 or (2) the gift is at least $43 and the only items provided bear the organization’s name or logo and the cost of these items is less than $8.60.

 How should an acknowledgment be worded?

 The IRS provides the following 3 examples of written acknowledgments:

When should an acknowledgment be sent?

Generally, organizations send acknowledgments to donors no later than January 31 of the year following the donation. That’s because donors must receive the acknowledgment by the earlier of 1) the date on which the donor files his or her individual federal tax returns for the year of the contribution; or 2) the due date of the return (including extensions).