Charitable Contributions: Substantiation and Disclosure Requirements

Posting by: Richard L. Ruvelson

Many individuals will be writing checks or making gifts of appreciated investment property to their family foundations or other charitable organizations over the next few days in anticipation of year end. If the gifts are being made to publicly supported charities with established giving programs and infrastructure, including donor advised funds, it is likely that the donors will receive a written acknowledgement of their gifts within a short period of time, well in advance of the April 15th tax filing deadline.

What if the contribution is made to the family foundation that is solely supported by your family or the foundation supported by your LLC? The Internal Revenue Code and Treasury regulations thereunder provide that donors are responsible for obtaining a written “contemporaneous” acknowledgement from a charity for any single contribution of $250 or more (cash or property) before the donors can claim a charitable contribution for deduction purposes on their federal income tax returns. It doesn’t matter what the size of the charitable organization is or whether donors outside of a particular family or business entity, for that matter, contribute. With respect to obtaining substantiation, all that matters is that a single contribution of $250 or more was made. Once that requirement has been met, written acknowledgement including substantiation must be made to the donor, prior to the earlier of the due date (including extensions) of the donor’s tax return or the date the donor actually files their tax return claiming the deduction.

The following must be included in a charitable organization’s written acknowledgement of a charitable gift:

  • The name of organization
  • The date of the gift (technically not required)
  • The amount of the cash contribution
  • A description (but not the value) of non-cash contribution
  • A statement that no goods or services were provided by the organization in return for the  contribution, if that was the case
  • A description and good faith estimate of the value of goods or services, if any, that an organization provided in return for the contribution
  • A 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

It isn’t necessary to include either the donor’s Social Security number or tax identification number on the acknowledgment. A separate acknowledgment may be provided for each single contribution of $250 or more, or one acknowledgment, such as an annual summary, may be used to substantiate several single contributions of $250 or more. There are no IRS forms for the acknowledgment and a simple letter containing the information outlined above will suffice.

We are happy to assist you with acknowledgements and/or answer any questions that you have regarding your organization’s acknowledgement of charitable gifts.

Happy New Year!

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