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Should donors be listed with their donations before or after net deduction?

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Should donors be listed with their donations before or after net deduction?

On an annual report, should donors be listed with their donations before the net deduction or after?

I am not entirely sure what you mean by “net deduction,” but in general I would list cash donors, to the extent that I was listing them by contribution level, according to the amount that they are able to deduct.  Therefore, if a donor gave $500 to a direct mail campaign that cost 30% to run, I would list the donor at $500, which is what the donor could deduct, not the $350 that I netted from the transaction.  On the other hand, if a donor bought a $500 ticket to the annual dinner-dance fundraiser and received a $150 value in return, I would list the donor at the $350 contribution level.  That is what you would be required to advise the donor was the contribution amount and would be all the IRS would recognize as deductible because of the quid pro quo benefit the donor received in return.

Some institutions may have different rules for recognizing the total amounts placed in a charitable remainder trust or the face value of transferred life insurance, without reducing them to present value or deductible amounts, but those are special situations.  You might recognize property gifts at fair market value even if a donor could deduct only a lower tax cost. I don’t think you can go wrong, however, listing donors according to the amount that they can deduct. 

Tuesday, December 30, 2008
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Comments

When I originally published this answer, several people commented that charities regularly list sponsors of fundraising events at the amount the donors paid to the charity, without regard to the value of quid pro quo benefits they receive that reduce the amount deductible by the donors.  That is a reasonable approach.  I think the key to the disclosure is consistency and transparency on the way the figure was determined.  There is no absolute right or wrong answer to this question. 

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