February 17, 2017

Written Acknowledgement of Donations to 501(c)(3) Organizations

Question:

A church official is responsible for providing contribution receipts to the members of his congregation for their tithes and offerings which they have given for the year. Several members of the congregation make their contributions by placing a check in a giving envelope. However, they intentionally do not put their names on the envelopes. Is it required by law that the church official keep track of what they are giving through their checks and give them a contribution receipt at the end of the year?

Answer:

A charitable organization is not required by law to issue receipts to donors for their contributions. However, in most cases, donors cannot receive a charitable tax deduction without the cooperation of the organization. We suspect that a charity that fails to serve its donors in this respect will soon lose its support.

According to IRS Publication 1771 an organization should prepare and send out written acknowledgments to to donors by January 31 following the tax year. This requirement mandates that organizations keep records of donors' contributions. Although the donor did not specify his name on the outside of the offering envelope, his name is on the check and can be traced as a contribution to the organization. 

Pub 1771 states why donors need written acknowledgements:

"A donor cannot claim a tax deduction for any single contribution of $250 or more unless the donor obtains a contemporaneous, written acknowledgment of the contribution from the recipient organization. An organization that does not acknowledge a contribution incurs no penalty; but, without a written acknowledgment, the donor cannot claim the tax deduction. Although it’s a donor’s responsibility to obtain a written acknowledgment, an organization can assist a donor by providing a timely, written statement containing: 
1. the name of organization 
2. the amount of cash contribution 
3. a description (but not the value) of non-cash contribution 
4. a statement that no goods or services were provided by the organization in return for the contribution, if that was the case
5. a description and good faith estimate of the value of goods or services, if any, that an organization provided in return for the contribution  
6. a statement that goods or services, if any, that an organization provided in return for the contribution consisted entirely of intangible religious benefits (described later in this publication), if that was the case."

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