Prompt and thoughtful gift acknowledgments are central to reporting compliance. IRS regulations govern what documentation donors need in order to claim a deduction for their charitable contribution.
It’s helpful to have the sample template ready to send out that can be customized as donations arrive, and it’s imperative to have a good system for recording who gave what, when, and how much.
IRS guidance suggests that gift acknowledgments should contain:
- A statement that the church is recognized as tax-exempt by the IRS under Section 501(c)(3);
- Either (a) amount donated (if cash or cash equivalents); or (b) description of the property donated (the church should not attempt to assign the cash value of the property; doing so is the donor’s responsibility);
- The date the donation was received;
- Either: (a) statement that the church did not provide more than insubstantial goods or services in return for the donation, such as, “No goods or services were received in return for this gift“; or (b) if the gift was $75 or more, and the church provided something of more than insubstantial benefit in return for the gift (such as tickets to a special event, or attendance at an event where donors receive a meal), then the church must provide a good faith estimate of the value of the goods/services provided by the church to the donor, such as the market value of tickets to the event, or the actual cost of the dinner (even if the food was donated to the charity).
Non-Cash Contribution Statement
Dear [Recipient’s Name],
Thank you for your contribution of a [contribution/donation description] in good condition. The [contribution name] is just what we needed for our [Sample – Youth Center] and we will be setting it up and using it immediately.
You did not receive any goods or services in connection with this contribution other than intangible religious benefits.
As you know, we are a qualified 501(c)(3) organization, so if you plan on claiming a tax deduction for this contribution you are responsible for establishing the value of the donated item. Under section 170(f)(8)(b) of the Internal Revenue Code, [Church Name] is prohibited from estimating the fair market value of your donated personal property.
If the value of the item exceeds $500 you will be required to file Form 8283. If the value exceeds $5,000 you may be required to obtain a certified appraisal. Consult your tax preparer for additional details.
Once again, thank you for the much-needed donation. If you have any questions, please do not hesitate to call me at [Church Treasurer contact number].
RETAIN FOR INCOME TAX PURPOSES
Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
For more information or if you need additional assistance, please use the contact information below.
Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369
Tel: (888) 421-0101
Fax: (888) 876-5101