Contribution Substantiation Examples
Posted on Wednesday, July 25, 2018
ShareA taxpayer must be able to substantiate a charitable contribution, regardless of the amount, in order to receive a charitable deduction on his tax return. Contributions of less than $250 can be substantiated with either a bank record (cancelled check) or a written contemporaneous communication from the nonprofit organization. However, for contributions of $250 or more, only a written contemporaneous acknowledgement from the nonprofit organization will suffice as proper substantiation, and only if it has required language.
The acknowledgement must include the following.
- Nonprofit organization’s name.
- Date of the contribution.
- Amount of cash and a description (but not a valuation) of any other property contributed.
- A statement noting whether the organization provided any goods or services in return for the contribution.
- If goods or services were provided, a description and good faith estimate of the value of the item(s) received.
The written acknowledgement may be in an electronic format and it may include multiple contributions on a single statement. It must be received by the filing date of the donor’s tax return for the year of the donation.
The following are examples of possible written acknowledgements that could be used in different circumstances.
For donations by cash or check:
“Dear John Smith:
Thank you for your cash donation of $xxx on [date]. You have received no goods or services in return for your contribution. You should keep this receipt with your tax records.”
“Dear John Smith:
Thank you for your cash donation of $xxx on [date]. You have received only intangible religious benefits in return for your contribution. You should keep this receipt with your tax records.”
“Dear John Smith:
Thank you for your cash donation of $xxx on [date]. You have received only token items of insubstantial value in return for your contribution. You should keep this receipt with your tax records.”
For donations of noncash property:
“Dear John Smith:
Thank you for your donation of the following items of property: [description of property donated] on [date]. You have received no goods or services in return for your contribution. You should keep this receipt with your tax records.”
“Dear John Smith:
Thank you for your donation of the following items of property: [description of property donated] on [date]. You have received only intangible religious benefits in return for your contribution. You should keep this receipt with your tax records.”
“Dear John Smith:
Thank you for your donation of the following items of property: [description of property donated] on [date]. You have received only token items of insubstantial value in return for your contribution. You should keep this receipt with your tax records.”
When the donor receives goods or services in return:
“Dear John Smith:
Thank you for your cash donation of $xxx on [date]. In return for your donation, you have received the following, which we value at $xx: [list of goods and/or services provided]. You should keep this receipt with your tax records.”
“Dear John Smith:
Thank you for your donation of the following items of property: [description of property donated] on [date]. In return for your donation, you have received the following, which we value at $xxx: [list of goods and/or services provided]. You should keep this receipt with your tax records.”
To find out more about contribution substantiation, read our previous blogs Contribution Substantiation and Lack of Contribution Substantiation.
Posted by: Carrie Minnich, CPA
Posted in Mission Minded Nonprofits
Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.