written by: Margi Williams•edited by: Wendy Finn•updated: 1/17/2011
Are you a not-for-profit professional, responsible for acknowledging non cash donations? This article will provide a quick overview of the IRS requirements associated with a non cash donation receipt as well as access to a free template available for immediate download.
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In these tumultuous economic times, not-for-profit organizations must depend more heavily on its donors for community support. Non cash donations are essential to ensuring the sustainability of these organizations as gifts such as clothing, appliances, computer equipment, and food items, often directly meet the needs of program constituents. Further, noncash donations can directly support fundraising events such as auctions or golf outings, allowing nonprofits to realize a greater profit. In this article, we provide an example of a non cash donation receipt as well as helpful tips you can use to prepare this document.
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NonProfit Organizations That Qualify
Whether a cash or noncash contribution, donor contributions are only deductible if donated to an eligible nonprofit organization. Per IRS guidelines, qualified tax-exempt organizations fall into five categories:
An organization created under the laws of United States for the following purposes:
The prevention of cruelty to children or animals.
2. War veterans' organizations created under United States law.
3. Domestic fraternal societies, orders, and associations as long as the contribution will be used for religious, charitable, educational, scientific, or literary purposes to include the prevention of cruelty children or animals.
4. Certain nonprofit cemetery companies or corporations, as long as it not for a specific lot or mausoleum crypt.
5. “The United States or any state, the District of Columbia, a U.S. possession (including Puerto Rico), a political subdivision of a state or U.S. possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions" (See www.IRS.gov, Types of Qualified Organizations, section 2 paragraph 1).
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An Overview of IRS Requirements
Per IRS publication 526, tax-exempt nonprofit organizations should provide a receipt that includes the organization’s name, the date of the contribution, the address where the contribution was made, and a description of the property. This receipt can be provided in the form of a letter printed on agency letterhead. Please note donors are excluded from providing a receipt if they were unable to secure one due to practical reasons. For example, a donor that made a donation to an organization after business hours at a drop site, would qualify for this exception. Please visit Bright Hub's Media Gallery to download an example of a non cash donation receipt.
When preparing a non cash donation receipt, the nonprofit organization is not required to provide a value for the donated item. Instead, the receipt should include a description of the donated item for their use, when filing their annual tax return. To learn more about this IRS requirement, please read Accounting Tips for Non-Cash Charitable Donations, or consult IRS Publication 526.
Noncash donations can be a great way to support your nonprofit's programs and services. Be sure you fully understand how your agency can stay in compliance with IRS regulations while supporting your donor's recordkeeping requirements.