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What Is The Truth About

Nonprofits and Tax Receipts?

There are lots of questions about issuing receipts to their donors for charitable donations for tax purposes. Here is
a little bit of information from the IRS to clear up any confusion!
FOR DONORS
Here are the key facts that donors should know about claiming a charitable contribution on their federal
income tax returns:
• Donors may use their bank statement to claim a tax deduction for a charitable contribution under
$250.00.
• It is the donor’s responsibility to obtain a written acknowledgment from the nonprofit for a single
contribution of $250.00 or more.

FOR NONPROFITS
As a nonprofit you are not legally required, nor will you incur a penalty, if you do not provide donors with
acknowledgments. However, donors will need a formal acknowledgement to claim a tax deduction for a
charitable contribution above $250.00. We are all in the business of keeping donors as happy as possible.
So, good charitable organizations should provide the following information in a timely fashion when a donor
requests a receipt:
1. The name of organization.
2. The monetary contribution amount.
3. A description (but not the value) of non-monetary contribution.
4. If no goods or services were provided in return for the contribution: a statement that no goods or
services were provided by the organization in return for the contribution.
5. If goods or services were provided in return for the contribution: a description and good faith
estimate of the value of goods or services, if any, that an organization provided in return for the
contribution.
A written disclosure statement is not required:
• where the goods or services given to a donor meet the “token exception,” or the “membership
benefits exception” described below.
• where there is no donative element involved in a particular transaction, such as in a typical museum
gift shop sale
Token Exception — Insubstantial goods or services a charitable organization provides in exchange for
contributions do not have to be described in the acknowledgment. Good and services are considered
to be insubstantial if the payment occurs in the context of a fund-raising campaign in which a charitable
organization informs the donor of the amount of the contribution that is a deductible contribution, and:
1. the fair market value of the benefits received does not exceed the lesser of 2 percent of the
payment or $106,* or
2. the payment is at least $53,* the only items provided bear the organization’s name or logo (for
example, calendars, mug or posters), and the cost of these items is within the limit for “low-cost
articles,” which is $10.60.*
3. Free, unordered low-cost articles are also considered to be insubstantial. Example of a token
exception: If a charitable organization gives a coffee mug bearing its logo that costs the
organization $10.60 or less to a donor who contributes $53 or more, the organization may state that
no goods or services were provided in return for the $53 contribution. The $53 is fully deductible.

*The dollar amounts are for 2016. Guideline amounts are adjusted for inflation. See IRS.gov for annual inflation adjustment information.
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