Giving Basics – Providing Donations Receipts
Giving Basics – Providing Donations Receipts.
The IRS requires that the DONOR to a church or nonprofit seeking a federal income tax deduction for a charitable gift must produce, if requested, a cancelled check, a bank record or a written receipt from the charitable organization for all gifts of currency and other single contributions valued at $250 or more.
The burden of proof falls on the donor. However, practically speaking, and in the interest of facilitating gifts, the church normally provides the proof of charitable gifts with a written receipt at year-end.
What Information Must Be on the Annual Donor Statement?
- The donor’s name
- Monetary Funds, the amount given/received
- Property, a description with NO value assigned by the church (autos, boats, airplanes require more documentation)
- A statement explaining whether the ministry provided any goods or services to the donor in exchange for their contribution
- If goods or services were provided, an estimate of the fair value of those should be provided and deducted from the total contribution.
- If NO goods or services were provided, the statement must say so.
- Date the donation was made
- Date the statement was issued (recommended) By the way, these statements are traditionally delivered by January 31, but the IRS only requires they be delivered prior to the taxpayer taking the deduction on their personal tax return or by the tax return deadline date.
Should Giving Statements Be Given More Often?
Some churches and nonprofits provide giving statements gift-by-gift, monthly, quarterly, or annually. Most churches provide these statements annually when the giving exceeds $250. There is no statement required at all if you recall that it is the giver’s burden of proof which includes requesting this statement from the church. However, besides accommodating your donors, it is also an additional internal control that allows the giver’s to audit that all of their giving has been properly recorded.
Other Receipting Situations
Separate Gifts of Less than $250
If the donor makes separate gifts by check or EFT during a calendar year of less than $250, then their canceled check or bank transaction statement is sufficient to substantiate the donation. However, most churches provide a year-end gift summary, including ALL gifts no matter the amounts. Our recommendation is to issue these giver statements when the total contributions for any donor exceed $250 total for the year.
Donations Payable to Another Tax-Exempt Organization
If a donor places a check in your offering made out to a different tax-exempt organization, it is not to be included in your church’s giving statement for this donor. The “payee” entity will need to issue the giving receipt to the giver.
Gifts to Individuals for Benevolence, Support or Love Offering
Gifts made by a donor to poor or needy individuals or to employees, instead of to the ministry in general, do not qualify as a tax-deductible donation. These transactions should not be included on the donor’s giving statement.
What About Quid Pro Quo Donations?
A quid pro quo donation is when a donor receives goods or services of a value which approximates the amount donated to the ministry. In this case, there is NO donation and these transactions should NOT be included on the Annual Giving Statement. However, if this quid pro quo payment is greater than $75, the church should acknowledge the payment. You may provide this receipt or acknowledgement at the time of solicitation (e.g. on the ticket to the banquet) or subsequent to the event.
When a church provides a gift to a giver valued at less than $11 that has the logo of the church on it, e.g. a coffee mug, then the donation is generally fully tax deductible.
Examples of Other Quid Pro Quo Situations:
- Admission to events. Banquets, concerts or other events are generally not tax deductible as the value is normally equal to the cost.
- Auctions (including Silent). The IRS determines that the bidder will not pay more than the item is worth and therefore these amounts are not tax-deductible. However, many tax professionals will tell you that you can give the donor a tax contribution for the difference between the fair market value and the actual amount paid.
- Bazaars and Fairs. Payments for goods, including baked goods, at these events are generally not tax-deductible.
There are more details and types of donations that could be discussed but we will leave those for individual discussions. We rely on here the information as provided by the Evangelical Council of Financial Accountability (ECFA). This should not be considered legal advice.
Check out the other blogs in our Giving Series of Blogs.