A donor just sent our 501(c)(3) 100,000 Iraqi Dinars in cash with a current value of about US$100. They believe when the Dinar revalues that the notes will greatly increase in value. Since we plan to hold the notes until the Dinar revalues, how do we receipt the gift? Do we use the US dollar value at the time the gift was received? Or, do we use the dollar value at the time gift is exchanged and deposited in our account?
For your receipt to the donor, you should say you received 100,000 Iraqi Dinars on the day you received the gift and, if true, that no goods or services were received in return. Assuming the donor seeks a U.S. charitable contribution deduction, it is the donor’s responsibility to value the gift.
For your internal accounting and tax reporting, you should value the gift in U.S. dollars at the exchange rate on the day it was given. It doesn’t make any difference whether you hold the funds as Dinars or convert them immediately. It is like receiving shares of stock in a publicly traded corporation. They are valued as of the date of the gift, even though they are likely to be worth somewhat more or less when you actually sell them.