Are gift card donations tax deductible?

Question:

A church received a large donation of gift cards for a specific local restaurant to be used as part of the benevolence fund. Can those church members that donated the gift cards receive a tax deduction?

Answer:

A gift card is considered a cash equivalent, so it should be treated as any cash contribution to the church would be treated. The contribution would still be tax-deductible to the donor and the donor should still receive a receipt for their donation at the end of the year.

The only difference is in how the donation is recorded in the church accounting software. The gift card does not go into the bank account since it is not cash, instead a separate asset account would need to be established to track the gift cards on hand. The gift card would normally then be recorded as income, or in this case an increase to the benevolence fund.

If you would like more information on some additional nuances that come with gift card donations you can see our other post on this topic linked here.

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MinistryCPA - Corey A. Pfaffe, CPA, LLC

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