Page 124 - Washington Nonprofit Handbook 2018 Edition

a. Donor Substantiation for All Gifts

In order for a donor to claim a charitable contribution deduction for any gift

paid by cash or check, the donor must maintain a record of the gift in the form of a
bank record, or a written communication from the charity showing the charity’s
name, the date of the contribution, and the amount of the contribution.

b. Donor Requirement: Written Receipts for Donations of $250 or
More

In order for a donor to deduct a contribution of $250 or more, the donor
must obtain a written receipt from the recipient charity. The receipt must verify the
amount of the contribution and must specifically state whether the charity provided
any goods or services, such as a dinner or concert, in consideration for the
contribution. If so, the receipt must include a good-faith estimate of the value of
the goods or services provided. If the donation is of property other than cash, the
receipt must describe the property, but is not required to specify the value of the
property. The charitable organization may provide a separate acknowledgment for
each contribution, or provide donors with an annual or more frequent
acknowledgment that sets out the required information for each contribution of
$250 or more. A canceled check will not satisfy this substantiation requirement.

c. Charity Requirement: Receipts for “Quid Pro Quo” Contributions

A charity that receives a payment partly as a contribution and partly as
payment for goods or services has received a “quid pro quo” contribution. A charity
that receives a quid pro quo contribution in excess of $75 must provide the donor

with a written statement setting out the amount of the payment that is deductible
as a contribution. This statement must indicate that the deduction is limited to the
excess of the amount of the contribution over the value of the goods or services
provided to the donor, and must include a “good-faith estimate” of the value of the
goods or services. Failure to make this required disclosure can result in penalties of
$10 per contribution, with a total maximum penalty of $5,000. An exception to the
quid pro quo rules may apply if a charity provides only token goods and services,
such as mugs or calendars.

d. Sale or Exchange of Donated Property

An individual or entity which contributes property to a 501(c)(3) organization
and claims a deduction for more than $5,000 must in most cases obtain an
appraisal that meets specific requirements set out in the Treasury Regulations and

WASHINGTON NONPROFIT HANDBOOK -113- 2018