Monday, November 21, 2011

A Question About Donations

As treasurer of my local unit, I want to be sure that we meet our requirements to maintain our tax exempt status, but I'm confused by the two sample receipts in Money Matters. The first one talks about donations of $75 or more and the second one addresses donations of $250 or more. If we're required to give a receipt for a donation of $75, why are there two different sample receipts?

The two situations are similar, but different.  The first involves a situation where the donor receives something of value in return for her/his donation, the most typical example being an auction.  If the donation (or in the case of an auction, the purchase price) is $75 or more and the donor receives something of more than nominal value (worth more than $9.60) then the PTA  must notify the donor of the value of the item s/he received.  The second involves a straight donation of cash or property worth $250 or more and the donor does not receive anything of value in return, in which case the PTA must give a receipt or other acknowledgement of the donation.  This is a confusing area, but there are some examples that make it more clearly in IRS Publication 17, which describes various individual situations.  It’s available on the IRS website (go to Part 5, Chapter 24).  And of course providing either a written receipt or letter of acknowledgement for all donations is a best practice.  Not only does such a practice create a record of all financial transactions, it lets the donor know that the PTA is appreciative of any support for its programs