Giving Statements for Churches & Faith-Based Organizations
Giving Statement: A Giving Statement is a formal written acknowledgement of a donation provided by the charitable organization recipient of the gift. The IRS has made clear that a donor “cannot claim a tax deduction for any single contribution of $250 or more unless the donor obtains a contemporaneous, written acknowledgment of the contribution from the recipient organization.” (IRS Publication 1771). Likewise, tax-exempt charitable organizations are required under the Internal Revenue Code (“IRC”) to provide written acknowledgements of donations to donors under certain circumstances.
Church Responsibility: A Church that is the recipient of single donations of $250 or more is required under the IRC to provide an acknowledgement of a donation upon the request of the donor that is:
- Contemporaneous with the donation
- Contains appropriate information about the donation
- Confirms whether and to what extent any services were received by the donor in exchange for the donation
The Church is required to provide a written acknowledgement to a donor without donor request for any single donation of more than $75 if the donor has received goods or services in exchange for the donation unless the goods or services meet the members benefits, intangible religious benefits exclusion or token exception.
Name of the Donee/Recipient Church: The Giving Statement must contain the full legal name of the Church. Do not use the trade name or other shortened version. Use of the Church's letterhead, if such letterhead contains the full legal name of the Church, is a good idea. If you are unsure of the full legal name of the Church, consult the Church's Articles of Incorporation and copy this name exactly as it appears in that document. It is not required but is a good idea to include the Church's address on the Statement. It is not necessary to include the Church's tax identification number.
Name of the Donor: Include the full name of the donor. The donor's social security number need not be included on the Giving Statement.
In Writing: The Giving Statement can be provided to the donor in hard copy or via electronic means such as email, whichever is the Church's practice.
Contemporaneous: The IRS requires that the acknowledgement of a donation be “contemporaneous” with the gift. An acknowledgment is contemporaneous if it is provided to the taxpayer on or before the earlier of the date of which the taxpayer files a return for the year in which the contribution was made, OR the due date (including extensions) for filing such return.
As such, it is advised that the Church be prepared to provide Giving Statements to its donors no later than January 31st for all donations received by the Church in the immediately preceding year. Though this calendar date is not dictated by the IRC, it is the date by which the IRS requires Employers to issue W-2 Wage Statements to employees. Thus, it is a common target date for taxpayers to have all necessary documentation in order to file their income tax returns shortly thereafter. Be sure your Giving Statements:
- Are dated for the date the Giving Statement is prepared;
- Indicate the time period of the donation(s); and
- If a donor requests a duplicate Giving Statement DO NOT change the date of the original statement. Stamp it “Duplicate Copy” and send it with a note stating that you have enclosed a duplicate copy of which was initially provided on the date as it appears on the Statement.
- Donations will be considered monetary unless otherwise specified. It is not necessary to specify whether the monetary donation was received by cash, check, credit card or auto-debit.
- Monetary donations can be combined for a single total.
- If the donation is of personal property, that is, anything other than money, the Statement must provide a description (but not the value) of the donation. Under IRC, it is the donor's responsibility to obtain the fair market value of the property donated, for his or her tax purposes.
- If the donation is of real estate, autos, boats or planes with a value of more than $500, you should seek the advice of a legal professional regarding the Giving Statement as other rules apply.
Required Statement: Include a statement that “No goods or services were provided by the Church in return for the contribution,” if that was the case.
Goods and services are benefits received that include cash, property, services, benefits or privileges.
When a donor receives goods and/or services in exchange for a donation, a description and good faith estimate of the value of goods or services must be included in the Giving Statement, and that amount deducted from the amount of the total donation. For example, if the Church holds a dinner to honor a beloved pastor offering tickets of $200 per person, the attendee cannot claim the full ticket price as a charitable deduction. Because the attendee is receiving goods or services in exchange for the ticket price, that is, the dinner, the attendee can only claim an amount equal to the difference between the amount given by the donor less the value of the goods received. The Church must set a price for the goods received, such as $40 per plate, and only the remainder can be claimed as a donation.
Token Exception: Goods and services received in exchange for a donation do not have to be disclosed or valued when the value of the goods or services are insubstantial.
When the goods received are of nominal value, such as a coffee cup imprinted with the name of the charitable organization, such items are considered by the IRS to be insubstantial and the value of such items need not reduce the amount of the whole donation.
During a fundraising campaign, goods and services provided are considered to be insubstantial, if the charitable organization informs the donor of the amount of the contribution that is deductible and
- The fair market value of benefits received is not more than 2% of a $102 payment
- The payment is at least $51, the benefits received bear the logo of the charity and the cost of such items is $10.20 or less. These 2013 amounts will be adjusted regularly for inflation.
Membership Benefits Exception: Membership benefits given in exchange for a donation of $75 or less are considered insubstantial even if the benefits include free or discounted admissions to events, parking and purchases from gift shop at non-profit entity.
Intangible Religious Benefits Exception: Donations to a religious organization that provide only intangible religious benefits in exchange need not describe or value such benefits on the Giving Statement. A statement that the donor received intangible religious benefits in exchange for the contribution should be included. In this instance the donor will be allowed to claim the full amount of the donation.
Unreimbursed Expenses: A volunteer who incurs expenses while doing work that benefits the Church can choose to claim these expenses, if unreimbursed, as a charitable tax deduction. The donor must obtain a written acknowledgement from the benefitted organization which contains a description of the services provided, a statement that the donor received no goods or services in return for the contribution. The donor should maintain good records and receipts of the unreimbursed expenses. An example is the travel expenses of a Church elder to a denominational summit to represent the Church such as a $300 plane ticket or $200 mileage (400 miles x $.50/mile), which the Church did not reimburse to the Church elder.
Penalty: The IRS imposes a penalty on charities such as churches that fail to meet the written disclosure regulations. Further, the donor may not be able to claim such donations as a tax deduction.
For more information on this topic, consult IRS Publication 1771 available here.
Contact Erika E. Cole, Esq. The Church Attorney®, for legal assistance at 410.654.4304.
This information is being provided to you by the attorneys in the Churches & Faith Based Organizations Group of Whiteford, Taylor & Preston, LLP. This information is general legal information; it is not legal advice pertaining to your specific legal matter. Laws vary based on jurisdiction. If you are in need of legal advice, you are advised to contact an attorney licensed in the jurisdiction in which your church is situated to provide advice directed to your particular issue and circumstances.