Is this gift deductible?
One of the quickest ways to discourage a donor from making second gift is by not providing them with a valid gift acknowledgment letter. Last week the Wall Street Journal writer Laura Saunders reminded charities and donors of the importance of obtaining a written acknowledgement of a gift.
Below we feature highlights from the article – to view the full article go to:
WSJ.com – One Easy Way to Lose That Charitable Deduction*This article is available to non-subscribers of the Online Journal for up to seven days after it is e-mailed.
Get the letter. Get the letter. That should be the mantra of taxpayers who make charitable gifts of $250 or more. “The letter” refers to the charity’s missive acknowledging your donation, and it must say certain things by a certain date for the gift to be deductible.
There isn’t any room for error here, as an Internal Revenue Service chief counsel memorandum from May demonstrates. In that case a donor who didn’t have a valid letter went to extreme lengths to correct the problem and still was denied. “If you don’t have the correct paperwork, there’s no way to fix the problem,” says Laura Peebles, a director at Deloitte Tax in Washington. She once saw a six-figure deduction for a gift to a university denied because of no valid letter.
The tax rules are clear: In order for charitable gifts of $250 and above to qualify for a deduction, there must be a letter detailing the amount of the donation and affirming that no goods or services were provided in connection with this gift—unless, of course, the taxpayer did receive something in return. If he or she received goods or services—a dinner, perhaps, or a tote bag with favors—then the letter should say what it was and how much it was worth, plus the net deduction allowed. The taxpayer also must have the letter in hand by the return’s filing date, although it may be sent by email. For cash donations under $250, a receipt or canceled check will often suffice.
Last week featured a local nonprofit survey – we provide an incorrect link to the survey. Please see below for how you can participate in the survey. We apologize for any inconvenience. The deadline for the survey is June 17th.
If you would like to participate in the 2011 Greater Cincinnati / Northern Kentucky Non-Profit Benchmarking Study, which is conducted by Barnes Dennig and HORAN, please e-mail email@example.com and provide your name, your organization and your e-mail address, and we will contact you with instructions and a link to the survey.
Participants will remain anonymous, and the final report will present the findings as averages. By participating, you will receive a complimentary copy of the report which will include the raw data, so you can compare your answers directly to other local, similarly sized participants. The results will help you chart a strategic course for the coming years, including understanding how your compensation and benefits structure can help you attract and retain talented employees.