Guidelines for Accepting Donations

Christian Shaeffer Exempt Non-Profit Organizations Leave a Comment

Donations In Kind

Recording in-kind donations of goods and certain professional services provides a means of recognizing and valuing contributed services and property at their fair market values at the time of contribution.  Recordable transactions must have a verifiable fair market value.   According to GAAP, donated professional services are recorded only if the service provided requires specialized skills and is provided by someone with those skills, and the service would otherwise have been purchased if it were not donated (for example, tax and legal services).

Non profit’s should provide receipts for donations in-kind, at the time of the donation, with the following: the name of the donor, date paid, name and address of NFP, a description of the property (a good faith estimate of the value is not necessary and actually the donor’s responsibility).  Also, the receipt must include a statement indicating whether or not any goods or services were provided in exchange for the contribution.   Also, since receipts are provided at the time of the donation, year-end statements are not necessary.

Monetary Donations

Per IRS publication 1771 and 526, donors can only deduct donations of cash or check of $250 or more if they have a receipt or bank record of the donation.  Therefore, the non profit should provide receipts, at the time of the donation, with the following: the name of the donor, date paid, name and address of the NFP, and amount of the contribution (cash).  Also, the receipt must include a statement indicating whether or not any goods or services were provided in exchange for the contribution.  Since receipts are provided at the time of the donation, year-end statements are not necessary.

Other points:

  • Receipts should not be given in the following situations (as they are not deductible to the donor): to donor whose contribution is for a specific individual, donated labor or services.
  • It is the donor’s responsibility to establish the fair market value (beyond our good faith estimate) of non-cash donations and to maintain records of actual expenses incurred.
  • In addition to receipts, handwritten “notes of thanks” can be given upon discretion of the non profit.

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