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At what amount does a charity have to acknowledge a gift?

Your Legal Questions Answered

At what amount does a charity have to acknowledge a gift?

What is the minimal dollar amount of a charitable donation that needs to be acknowledged in writing by the charity to the donor? 

You may be surprised to know that a charity has no legal obligation to acknowledge a charitable contribution if it does not provide any goods or services in return.  A donor has an obligation to obtain a contemporaneous written acknowledgment of any gift of $250 or more, however, if the donor wants to claim a charitable contribution deduction on the tax return for the year in which the gift was made.  A donor who makes a gift of cash in the form of actual currency needs the written acknowledgment to claim any deduction for the gift, regardless of the size.  Most charities acknowledge all gifts, of whatever size, as a matter of best practices.  They don’t want unhappy donors who can’t claim legitimate deductions.  (See Ready Reference Page: “IRS Requires Substantiation of Contributions”)

If the charity is providing goods or services in return for a payment and the payment from the donor/purchaser is more than $75, the charity does have a legal obligation to notify the donor/purchaser of the value of such goods or services that cannot be deducted.  Only the amount that exceeds the value of the goods or services can be deducted as a charitable contribution.  The charity can be fined for failure to provide the information.  There are a few exceptions to the rules for reducing the charitable contribution deduction, particularly those related to “low cost items” of insubstantial value.  The limits change annually and in 2019, a deduction does not have to be reduced if it is at least $55.50 and the cost of the stuff to the charity (the cost and not the value) does not exceed $11.10.  (See Ready Reference Page: “Charities Must Set Value on ‘Quid Pro Quo’ Gifts”)  Again, most charities notify the donor/purchasers of the amount they can deduct in a quid pro quo gift even if the payment is less than $75.

Tuesday, March 5, 2019

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