Share on Facebook
Share on X
Share on LinkedIn

Tax exempt organizations may accept contributions of cash or property.  A tax deduction is allowed for any charitable contribution of which is made within the taxable year under IRC Section 170(c).  The organization has an obligation to substantiate contributions for the donor’s income tax deductions purposes.  A gift acceptance policy will serve as a guideline and help board members and staff to determine what gifts are acceptable and establish the organization’s role.

Substantiation Requirements

Federal law imposes strict substantiation requirements for donors and disclosure requirements for charitable organizations.  Charitable organizations should provide a written statement to its donors that will be used by the donor for income tax deductions.  A donor can deduct a charitable contribution of $250 or more only if the donor has a written acknowledgement from the charitable organization.  Additional substantiation requirements generally apply to contributions of real and personal property.  Failure to comply with these requirements may subject the tax exempt organization to monetary penalties and jeopardize the income tax deduction of its donors.

Gift Acceptance Policy

Organizations should avoid a “make policy as needed” approach and establish a gift acceptance policy.  Gift acceptance policies maintain discipline in accepting gifts to prevent acceptance of gifts that will cost the non-profit time, money and possibly its reputation.  It will also establish guidelines and understanding of when to say “no thank you.”

There are many factors for nonprofits to consider when accepting a charitable contribution.  Contact our nonprofit attorneys at Schneiders & Associates to assist you with handling charitable gifts and drafting a gift acceptance policy.

By: Roy Schneider, Esq.

About the Author
Theodore J. Schneider practices in the areas of business and corporate transactions, employment law counseling, municipal and public law, real estate and land use, and homeowner associations. Ted began his legal career in 2002 when he joined the Los Angeles office of Gibson, Dunn & Crutcher, L.L.P. before relocating to Ventura County to join his father in practice.