Based on some other answers you've given, donations of labor for plumbing, electrical, etc. work are not considered revenue for our new 501(c)(3) organization. However, can those individuals claim the value of those donated services on their taxes as charitable donations? And on a related note, is it better to have them donate the materials used and have us pay for their labor, or visa-versa; or does it really matter from a tax standpoint for either us or those who donate how donations are made? ...we are starting a Homeless Services Center.
Donors of services may not deduct the value of the services as charitable contributions. Donors of goods and materials may ordinarily claim a deduction, the amount of which may vary depending on the type of donor and type of goods. If you accept donations of goods and pay for services, the donor will have to record income and pay tax on the amount received for services. To the extent that the donor is subject to tax based on gross income without regard to deductions, which could include FICA obligations, state or local income tax, or a local gross receipts type tax, it may be disadvantageous to attempt to match the compensation with the deduction for materials. Although the income may equal the deduction for federal income tax purposes, the donor could owe one of the other taxes on the income. It is much more appropriate to accept contributions of both goods and services as contributions and acknowledge them with thanks. Playing games is not helpful.
State Charitable Solicitation Statutes: Everything You Wanted to Know But Were Afraid to Ask
Charities that seek contributions nationally must typically register in 39 states and the District of Columbia before starting to solicit. Furthermore, for-profit fundraisers are also required to register and file their contracts and other documentation with many states. Since many states are increasing their enforcement efforts to ensure that charities and fundraisers are complying with initial and annual registration requirements, it's important that charities and fundraisers abide by these statutes.
Program materials include an extensive review of the statutes and their provisions, plus a copy of the Uniform Registration Statement for multi-state filings. Purchasers will receive an e-mail receipt that includes a link that will take them to the product download. The download is a pdf file. Learn More
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