Public Nonprofits and 501(c)(3) chartiable organizations have an obligation to ensure the donations received are properly documented. The IRS regulations are complicated and cumberson. The failure to follow the IRS regulations related to documentation can be financially harmful to both the nonprofit and to the donor.
If the donor’s payment (quid pro quo contribution) exceeds $75. The required written disclosure statement must:
- Inform the donor that the amount of the contribution that is deductible for federal income tax purposes is limited to the excess of any money (and the value of any property other than money) contributed by the donor over the value of goods or services provided by the charity; and
- Provide the donor with a good faith estimate of the value of the goods or services that the donor received. (“Quid Pro Quo” contribution means the total amount of the donation, which is not the same as the deuctible portion of the donation).
If a donor provides a monetary donation of $250.00 or more, the nonprofit must keep copies of the check, credit card receipt or proof of cash.
For more information regarding the regulations related to donations, review the IRS Notice (Substantiating Charitable Contributions IRS Notice 2-2-16.docx).
L. Sue Loftin is the Founder and Shareholder of The Loftin Firm. For questions relating to this blog or any other California real estate, corporate governance, land use, or estate planning matter, contact Ms. Loftin at 760-814-9649.