After evaluating whether a gift qualifies as deductible, the next most important consideration is the substantiation of the charitable contribution. In order to deduct a charitable contribution, a donor must obtain a written receipt from the charity if a single gift of cash or property is $250 or more. The responsibility for obtaining a receipt (in the eyes of the IRS) rests with the donor, not the church. In order to qualify as substantiation, the receipt must include the following:
- The name of the donor.
- If cash, the amount given.
- If property, a description of what was given, but no value.
- A clause stating whether or not the donor received anything in exchange for the gift. “No goods or services were received in exchange for this gift other than intangible religious benefits.”
- The date of the gift.
- The date the receipt was given to the donor. Donors must receive receipts no later than the due date (plus extensions) of their income tax return. If the donor receives the statement after this date the gift does not qualify as a deduction!
The considerations for non-cash contributions raise an entirely new set of concerns. Some non-cash contributions might be better off refused. Certain gifts of property have a special set of requirements. In addition to the receipting requirements already described, there are specific considerations for non-cash contributions. For gifts of property in excess of $500 but less than $5,000, the donor must complete page one of IRS Form 8283. The church, however, has no reporting responsibility. For gifts of certain property in excess of $5,000, the donor must obtain an appraisal.
Substantiation of contributions, as well as the evaluation of gifts as charitable, are valid topics for a church's Contribution Policy.
Does your church have a formal contribution policy? Besides evaluation and substantiation, what other matters does (should) your Contribution Policy cover?
--As National Relationship Manager with PSK LLP, Delton de Armas is a self-described right-brain dreamer solving left-brain problems, focusing on developing relationships with church leadership, layman, and other supporting professionals to help identify challenges and offer creative solutions.
