DONATION and U.S. Receipts for over $300

Hello DONATION advisers. This post is only for those of you in the U.S.A.

I was talking to a potential new user today who said that U.S. charities are required to send an official individual acknowledgement of donations of $300 or more. Can any of you explain that further please, if you know about it? Would our receipts (for instance at year end) showing the details of each individual donation not be sufficient to satisfy this requirement?

I said that with the full Standalone version, they could do a mail-merge letter for such donations. However, with the Lite version (which she was starting with) it’s more of a problem, if they don’t want to create such letters manually.

I did say that one option was to create a year-to-date official receipt prior to entering that larger donation, then another receipt right after entering it. Obviously that’s a bit awkward.

Any other thoughts on this issue and ways to handle it? Many thanks.

7 thoughts on “DONATION and U.S. Receipts for over $300

  1. Actually, it is $250 or more, but an annual receipt is okay.

    Selected sections from IRS Publication 1771 (Rev. 7-2013) “Charitable Contributions: Substantiation and Disclosure Requirements” —

    Written Acknowledgment Requirement A donor cannot claim a tax deduction for any single contribution of $250 or more unless the donor obtains a contemporaneous, written acknowledgment of the contribution from the recipient organization. An organization that does not acknowledge a contribution incurs no penalty; but, without a written acknowledgment, the donor cannot claim the tax deduction.

    A separate acknowledgment may be provided for each single contribution of $250 or more, or one acknowledgment, such as an annual summary, may be used to substantiate several single contributions of $250 or more.

    Contemporaneous Recipient organizations typically send written acknowledgments to donors no later than January 31 of the year following the donation. For the written acknowledgment to be considered contemporaneous with the contribution, a donor must receive the acknowledgment by the earlier of: the date on which the donor actually files his or her individual federal income tax return for the year of the contribution; or the due date (including extensions) of the return.

    Thanks, Frank Arthur Treasurer, New Life Church of Central Brevard

    • Thank you, Frank. One thing I do not understand from that wording is whether it means that such an inclusive receipt is also allowed to include smaller contributions, or must only include those contributions of $250 or more.

      • Dan, it’s my understanding that the amount can stand alone in a receipt (or letter of gift, etc.) or be included in a giving statement (quarterly or annual.) The IRS just needs verification from the recipient of the gift, date, and amount. This also includes gifts other than cash, such as a new appliance or furnishings that the donor wishes to claim on their taxes.I send a letter to the gifter in thanks, with the gift details for their records.

    • What does “verify” mean in this context Vivian? Frank’s comment seems to be quoting directly the relevant IRS regulations, but I have to admit not all of it is clear to me.

  2. Dan,

    I just use the annual receipt to acknowledge any single gift of $250 or more. This satisfies IRS requirements as far as I know. I see no need for a special feature in the program other than what is already there.

  3. I believe it is $250 for cash – different amount for in-kind. http://www.irs.gov/Charities-&-Non-Profits/Substantiating-Charitable-Contributions. We send an acknowlegement (mail merge) with the required language for all donations at the time of donation. We do not send an end of year statement.

    A donor claiming a deduction of $250 or more is also required to obtain and keep a contemporaneous written acknowledgment for a charitable contribution . To be contemporaneous the written acknowledgment must generally be obtained by the donor no later than the date the donor files the return for the year the contribution is made. The written acknowledgment must state whether the donee provides any goods or services in consideration for the contribution. If the donee provides goods or services to the donor in exchange for the contribution (a quid pro quo contribution), the written 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 acknowledgement 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. For more information, seePublication 1771.

    The contemporaneous written acknowledgment may be contained in the same document as the written communication from the donee used to satisfy the new cash recordkeeping requirement, as long as it contains all information required by both the recordkeeping requirement and the contemporaneous written acknowledgment requirement.

    Cindy Rhea
    Primary Care & Hope Clinic

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