Charitable organizations typically send written acknowledgments to donors no later than January 31 of the year following the donation. For the written acknowledgment to be considered contemporaneous with the contribution, a donor must receive the acknowledgment by the earlier of: the date on which the donor actually files his or her individual federal income tax return for the year of the contribution; or the due date (including extensions) of the return.
The acknowledgment must describe goods or services an organization provides in exchange for a contribution of $250 or more. It must also provide a good faith estimate of the value of such goods or services because a donor must generally reduce the amount of the contribution deduction by the fair market value of the goods and services provided by the organization. Goods or services include cash, property, services, benefits or privileges.
However, insubstantial benefits a charity provides in exchange for contributions do not have to be described in the acknowledgment.
The IRS guidelines for insubstantial benefits for 2016 are as follows:
1. The fair market value of benefits received does not exceed the lesser of $106 or 2% of the total payment.
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Or
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2. The payment is at least $53, the only items provided bear the organization’s name or logo (e.g., calendars, mugs, posters, bookmarks, key chains), and the cost of these items is within the limit for “low-cost articles,” which is $10.60.
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Or
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3. In connection with a campaign, the benefits are distributed to potential donors who neither requested nor expressly consented to receive them, and the cost of the item does not exceed $10.60.
