The IRS Speaks More Latin: Non-Quid Pro Quo Donations
If you do not give a donor something in return for his or her contribution, this is a Non-Quid Pro Quo contribution. An example would be that John Ramirez gives your nonprofit organization a $100 contribution, and you give him nothing of value in return. This is a Non-Quid Pro Quo contribution. The Non-Quid Pro Quo contribution is the more typical contribution for most organizations.
If you do give something of value in return, you will want to read our article here.
It is important to note that a donor cannot claim a tax deduction for any contribution unless he or she maintains a record of the contribution in the form of either a bank record (such as a canceled check) or a written communication from the nonprofit organization showing the name of the organization, the date of the contribution, and the amount of the contribution.
In addition, without a written acknowledgment from your organization, donors cannot claim a tax deduction for any single contribution of $250 or more.
Although it is a donor’s responsibility to obtain a written acknowledgment (often referred to as a tax-deductible receipt), your organization can assist the donor by providing a timely written statement.
What needs to be on the Written Acknowledgment (Tax-Deductible Receipt)
- Name of the organization
- Date of the contribution
- Amount of any cash contribution
- Description (but not value) of non-cash contribution
- Statement that no goods or services were provided by the organization in return for the contribution, if that was the case
- Description and good faith estimate of the value of goods or services, if any, that an organization provided in return for the contribution
- Statement that goods or services, if any, that an organization provided in return for the contribution consisted entirely of intangible religious benefits, if that was the case
Example of an Acknowledgment Letter
“Thank you for your cash contribution of $300 that [organization’s name] received on December 21, 2012. No goods or services were provided in exchange for your contribution.”
More Information about tax-deductible receipts
When do I have to send the acknowledgment to the donor?
Generally, organizations send acknowledgments to donors no later than January 31 of the year following the donation. That”s because donors must receive the acknowledgment by the earlier of 1) the date the donor files his or her individual federal tax returns for the year of the contribution; or 2) the due date of the return including any extensions.
Can I send the donor an e-mail acknowledgment?
Yes. An organization can either provide a paper copy of the acknowledgment, or it can provide the acknowledgment electronically, such as via an email addressed to the donor.
Acknowledging Donors’ Unreimbursed Expenses
If a donor makes a single contribution of $250 or more in the form of unreimbursed expenses, such as out-of-pocket transportation expenses to speak at a conference your organization sponsored, you must send the donor a written acknowledgment letter, and the donor should keep good records of the expenses.
What should the acknowledgment letter include?
- A description of the services provided by the donor
- If goods or services were provided in return for the contribution, a description and good faith estimate of the value of those goods or services
- A statement that goods or services that the organization provided in return for the contribution consisted entirely of intangible religious benefits, if that was the case
End of Blog Quiz (Non-Quid Pro Quo Donations)
1. Betty keeps very good records and can prove that she gave $300 cash to X nonprofit organization. She says as long as she keeps good records, she doesn’t need to bother X organization to give her a receipt? What would you advise her?
Without a written acknowledgment from your organization (a cancelled check will suffice), donors cannot claim a tax deduction for any single contribution of $250 or more.
2. Alexander is the CEO of a nonprofit organization. At the end of the year, he tells his board, “We’ve always sent paper receipts to our donors during January. But that means a lot of postage, and we have everybody’s e-mail address. Let’s just send them their acknowledgment of how much they gave us this year by e-mail.”
“By email?!?! the board roared. You’ve got to be kidding!” Was the board right?
An organization can provide either a paper copy of the acknowledgment, or it can provide the acknowledgment electronically, such as via an email addressed to the donor.
3. Carlos told his board that as long as the annual tax-deductible receipts for donations from the previous year arrived to the donors before April 15, they were “safe.” If you were on the board, what would you say to Carlos?
“To help donors, we should send an acknowledgment letter, email, or postcard no later than January 31 of the year following the donation. After all, if we are the cause of holding up our donor’s doing their tax returns, we will lose good will. And we can’t afford to do that.”
“Yes, donors must have the acknowledgment by the time they file their individual Federal tax returns for that year (normally April 15) or by the due date of the return including any extensions (this could vary from donor to donor—whichever is earlier). But it is best all around to get those tax-deductible receipts out by January 31 at the latest.”
4. Scott made 50 individual $100 contributions to Y nonprofit over the course of a year and received no written acknowledgement (tax-deductible receipt) from the nonprofit. He does have cancelled checks. Can he claim a tax deduction for his donations?
Yes, even though he is well over $250 in donations, the rule is that without a written acknowledgment from the organization, donors cannot claim a tax deduction for any single contribution of $250 or more. Since Scott’s donations were all under the $250 threshold, he does not need any tax-deductible receipt from the organization.