Donation Substantiation

thank_you_note1As we approach the end of the year, many organizations may experience a flurry of donations. It is important to be aware of the related substantiation requirements.

Substantiation of cash donations can be fairly straight-forward. An organization can provide a statement including the name of the organization, the amount of the contribution, and a statement that no goods or services were provided by the organization in return for the contribution.

However, if any goods or services were provided in return for the contribution, there are additional substantiation requirements. A description and good faith estimate of the value of the goods and services must be provided to the donor. For example, attendees of gala events must be apprised of the portion of the ticket price that is deductible and the portion that is nondeductible.

There are additional provisions and some exceptions to the substantiation rules. Nonprofit organizations are encouraged to become familiar with the rules. IRS Publication 1771 contains helpful information.

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