Donation acknowledgements letters will include:
- The name of our organization
- Date of the contribution
- The cash contribution amount
- The description (but not value) of any noncash contributions
- A statement that no goods or services were provided by the organization in return for the contribution, if that was the case
- Quid Pro Quo will include a description and good faith estimate of the value of goods or services, if any, that our organization provided in return for the contribution
- Donation acknowledgment letters will be mailed to donors no later than January 31 of the year following the donation
Exceptions to donor acknowledgement letters:
- “Tokens” Goods and services are considered insubstantial tokens if these three things are true:
- The donor gave at least $51*
- The item bears the organization’s name or logo (think calendars, mugs or posters)
- The item does not cost more than the annual inflation adjustment
- Membership benefits you don’t need to disclose are:
- Free or discounted admissions to the organization’s facilities or events
- Discounts on purchases from the organization’s gift shop
- Free or discounted parking
Acknowledging Donors’ Unreimbursed Expenses:
- If a donor makes a single contribution of $250 or more in the form of unreimbursed expenses, such as those out-of-pocket transportation expenses to travel to our organization's event, the donor will receive an acknowledgment letter.
- It will include a description of the services provided by the donor
- A description and good faith estimate of the value of any goods or services that our organization provided in return for the contribution
Quid pro quo disclosures. Quid pro quo is Latin for “something for something,” as in, you give something to get something. When a donor makes a contribution to our organization and they receive a good or service in return for their donation, they’ve made a quid pro quo contribution. If that donation is greater than $75 and we give the donor something in return, we must disclose the value of that item or service to the donor.
Donors can only claim a deduction for the amount they contributed above the amount of the goods or services they received. Any receipts or written statements will clearly state the contribution, the date of contribution, the quid pro quo ... the received good or service in return for the donation with it's fair market value and the contribution deduction amount.
Non-deductible taxable Corporate sponsorship:
The IRS will look at the payment made to a nonprofit by a corporate sponsor and decide whether the payment is a tax-free gift (charitable contribution) or a taxable advertising payment. Examples of sponsorships:
- Exclusivity: if a nonprofit promises a for-profit that it will be the “exclusive” sponsor, that promise may trigger a finding of “substantial return benefit” if the IRS finds that being the exclusive sponsor confers a substantial benefit on the sponsor. (See IRS guidance on Exclusive Provider Arrangements.)
- Providing prices, indications of savings or value, endorsements, or inducements to buy a sponsor’s products or services.
- Providing a link from a sponsor’s name/logo on the nonprofit’s website to the page of a sponsor’s website where a product or service is sold, or listing the phone number where the product or service can be ordered.
- Providing more than token services or other privileges to the sponsor in return for its sponsorship payment, such as tickets to an event that are complimentary and not otherwise available to the public, or lavish receptions (!).
- Accepting a payment from a corporate sponsor that is contingent upon the level of attendance at the nonprofit’s event.
- Providing sponsors with advertising or acknowledgments in a nonprofit’s regularly scheduled and published materials, such as an eNewsletter.
- Corporate sponsorship payments that are provided in return for specific advertising opportunities.
Corporate Charitable contributions:
- The sponsor’s name, logo, general phone number, locations, and internet address in printed media, or on a nonprofit’s website.
- Value-neutral displays of a sponsor’s products or services, or the distribution of free samples of a sponsor’s products at a nonprofit’s event. The nonprofit should not endorse the product/service.
- A single static internet website link that takes the viewer only to the sponsor’s home page – not to a page where a product or service is marketed or sold.