This series discusses the documentation rules that a charity should follow to ensure an individual donor can take his or her charitable deduction for the donation. Part I of this series set forth the written acknowledgement rules that apply when an individual donor does not receive goods or services in exchange for his or her donation. In this installment, we will discuss the quid pro quo rules.
The quid pro quo rules are the documentation rules that apply when an individual donor receives goods or services in exchange for his or her donation. For example, these rules should be followed when a charity hosts a fundraising dinner to raise funds for its mission. An individual who purchases a ticket to the dinner is not entitled to deduct the full amount of his or her ticket. Instead, the individual may only deduct the difference between the ticket price and the fair market value of the dinner.
The charts below are meant as a quick reference guide to help ensure your charity is complying with the quid pro quo rules. Use Chart I for cash contributions and Chart II for contributions of property other than intellectual property and vehicles. Note, the contribution amount is the amount of money donated (whether in the form of a donation, a ticket or a sponsorship) and not the difference between the amount of the donation and the fair market value of the goods or services received.
Chart I:
Chart II:
Again, special rules apply when intellectual property or vehicles are contributed, or when a contribution of property is made by a C corporation. Additionally, there are exceptions to these quid pro quo disclosure rules. Those exceptions will be covered in Part III of this series. Check back soon!
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
