Publication 1771 (Rev. 3-2016)

Charitable

Contributions

Substantiation and

Disclosure Requirements

Tax Exempt and Government Entities

EXEMPT ORGANIZATIONS

Publication 1771 (Rev. 3-2016) Catalog Number 20054Q Department of the Treasury Internal Revenue Service www.irs.gov

Contents

Recordkeeping Rules ........................................................ 2

Written Acknowledgment .................................................. 2

Unreimbursed Expenses .................................................. 5

Written Disclosure ............................................................. 6

Further Information ........................................................... 7

Are you an organization that receives contributions of $250 or more?

Are you an organization that provides goods or services to donors who

make contributions of more than $75?

Are you a donor who makes contributions to a charity?

IRS Publication 1771, Charitable Contributions–Substantiation and Disclosure

Requirements, explains the federal tax law for organizations, such as charities and

churches, that receive tax-deductible charitable contributions and for taxpayers who make

contributions.

The IRS imposes recordkeeping and substantiation rules on donors of charitable

contributions and disclosure rules on charities that receive certain quid pro quo

contributions.

 Donors must have a bank record or written communication from a charity for any

monetary contribution before the donors can claim a charitable contribution on their federal

income tax returns.

 Donors are responsible for obtaining a written acknowledgment from a charity for any

single contribution of $250 or more before the donors can claim a charitable contribution on

their federal income tax returns.

 Charitable organizations are required to provide a written disclosure to a donor who

receives goods or services in exchange for a single payment in excess of $75.

More on recordkeeping, written acknowledgments and written disclosures is addressed in

this publication. The rules in this publication do not apply to a donated motor vehicle, boat

or airplane if the claimed value exceeds $500. For information on vehicle donations, see

IRS Publication 4302, A Charity’s Guide to Vehicle Donation, and IRS Publication 4303, A

Donor’s Guide to Vehicle Donation.

For information about organizations that are qualified to receive charitable contributions,

see IRS Publication 526, Charitable Contributions. Publication 526 also describes

contributions you can (and cannot) deduct, and it explains deduction limits. For assistance

about valuing donated property, see IRS Publication 561, Determining the Value of Donated

Property.

Recordkeeping Rules

Requirement

A donor cannot claim a tax deduction for any contribution of cash, a check or other

monetary gift unless the donor maintains a record of the contribution in the form of either a

bank record (such as a cancelled check) or a written communication from the charity (such

as a receipt or letter) showing the name of the charity, the date of the contribution and the

amount of the contribution.

Payroll Deductions

For charitable contributions made by payroll deduction, the donor may use a pledge

card prepared by or at the direction of the charitable organization, along with one of the

following documents:

 a pay stub,

 Form W-2, Wage and Tax Statement, or

 other employer-furnished document that shows the amount withheld and paid to a

charitable organization.

If a donor makes a single contribution of $250 or more by payroll deduction, the pledge

card or other document from the organization must also include a statement to the effect

that the organization does not provide goods or services in whole or partial consideration

for any contributions made to the organization by payroll deduction.

Each payroll deduction amount of $250 or more is treated as a separate contribution for

purposes of the $250 threshold requirement for written acknowledgments.

Written Acknowledgment

Requirement

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

It isn’t necessary to include either the donor’s Social Security number or tax identification

number on the acknowledgment.

A separate acknowledgment may be provided for each single contribution of $250 or more,

or one acknowledgment, such as an annual summary, may be used to substantiate several

single contributions of $250 or more. There are no IRS forms for the acknowledgment.

Letters, postcards or computer-generated forms with the above information are acceptable.

An organization can provide either a paper copy of the acknowledgment to the donor,

or an organization can provide the acknowledgment electronically, such as via an email

addressed to the donor. A donor shouldn’t attach the acknowledgment to his or her

individual income tax return, but must retain it to substantiate the contribution. Separate

contributions of less than $250 will not be aggregated. An example of this could be weekly

offerings to a donor’s church of less than $250 even though the donor’s annual total

contributions are $250 or more.

Contemporaneous

Recipient 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 les his or her individual federal income tax return for

the year of the contribution; or

 the due date (including extensions) of the return.

Goods and Services

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 the 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, there are important exceptions:

Token Exception — Insubstantial goods or services a charitable organization provides in

exchange for contributions do not have to be described in the acknowledgment.

Good and services are considered to be insubstantial if the payment occurs in the context

of a fund-raising campaign in which a charitable organization informs the donor of the

amount of the contribution that is a deductible contribution, and:

1. the fair market value of the benefits received does not exceed the lesser of 2 percent of

the payment or $106,* or

2. the payment is at least $53,* the only items provided bear the organization’s name or

logo (for example, calendars, mug or posters), and the cost of these items is within the

limit for “low-cost articles,” which is $10.60.*

*The dollar amounts are for 2016. Guideline amounts are adjusted for inflation. See IRS.gov

for annual inflation adjustment information.

Free, unordered low-cost articles are also considered to be insubstantial.

Example of a token exception: If a charitable organization gives a coffee mug bearing its

logo that costs the organization $10.60 or less to a donor who contributes $53 or more,

the organization may state that no goods or services were provided in return for the $53

contribution. The $53 is fully deductible.

Membership Benefits Exception — An annual membership benefit is also considered to be

insubstantial if it is provided in exchange for an annual payment of $75 or less and consists

of annual recurring rights or privileges, such as:

1. free or discounted admissions to the charitable organization’s facilities or events

2. discounts on purchases from the organization’s gift shop

3. free or discounted parking

4. free or discounted admission to member-only events sponsored by an organization,

where a per-person cost (not including overhead) is within the “low-cost articles” limits

Example of a membership benefits exception: If a charitable organization offers a $75

annual membership that allows free admission to all of its weekly events, plus a $20

poster, a written acknowledgment need only mention the $20 value of the poster, since the

free admission would be considered insubstantial and, therefore, would be disregarded.

Intangible Religious Benefits Exception — If a religious organization provides only

“intangible religious benefits” to a contributor, the acknowledgment does not need

to describe or value those benefits. It can simply state that the organization provided

intangible religious benefits to the contributor.

What are “intangible religious benefits”? Generally, they are benefits provided by a tax-

exempt organization operated exclusively for religious purposes, and are not usually sold

in commercial transactions outside a donative (gift) context. Examples include admission

to a religious ceremony and a de minimis tangible benefit, such as wine used in a religious

ceremony. Benefits that are not intangible religious benefits include education leading to a

recognized degree, travel services and consumer goods.

Unreimbursed Expenses

If a donor makes a single contribution of $250 or more in the form of unreimbursed

expenses, for example, out-of-pocket transportation expenses incurred to perform donated

services for an organization, then the donor must obtain a written acknowledgment from

the organization containing a:

 description of the services provided by the donor

 statement of whether the organization provided goods or services in return for the

contribution

 description and good faith estimate of the value of goods or services, if any, that the

organization provided in return for the contribution

 statement that goods or services, if any, that the organization provided in return for the

contribution consisted entirely of intangible religious benets (described earlier in this

publication), if that was the case

In addition, a donor must maintain adequate records of the unreimbursed expenses. See

Publication 526, Charitable Contributions, for a description of records that will substantiate

a donor’s contribution deductions.

Example of an unreimbursed expense: A chosen representative to an annual convention

of a charitable organization purchases an airline ticket to travel to the convention. The

organization doesn’t reimburse the delegate for the $500 ticket. The representative

should keep a record of the expenditure, such as a copy of the ticket. The representative

should obtain from the organization a description of the services that the representative

provided and a statement that the representative received no goods or services from the

organization.

Examples of Written Acknowledgments

 “Thank you for your cash contribution of $300 that (organization’s name) received

on December 12, 2015. No goods or services were provided in exchange for your

contribution.”

 “Thank you for your cash contribution of $350 that (organization’s name) received on May

6, 2015. In exchange for your contribution, we gave you a cookbook with an estimated fair

market value of $60.”

 “Thank you for your contribution of a used oak baby crib and matching dresser that

(organization’s name) received on March 15, 2015. No goods or services were provided in

exchange for your contribution.”

The following is an example of a written acknowledgment when a charity accepts

contributions in the name of one of its activities:

 Thank you for your contribution of $450 to (organization’s name) made in the name of its

Special Relief Fund program. No goods or services were provided in exchange for your

contribution.”

Written Disclosure

Requirement

Donors may only take a contribution deduction to the extent that their contributions

exceed the fair market value of the goods or services the donors receive in return for

the contributions; therefore, donors need to know the value of the goods or services. An

organization must provide a written disclosure statement to a donor who makes a payment

exceeding $75 partly as a contribution and partly for goods and services provided by the

organization. A contribution made by a donor in exchange for goods or services is known

as a quid pro quo contribution.

Example of a quid pro quo contribution: A donor gives a charitable organization $100

in exchange for a concert ticket with a fair market value of $40. In this example, the

donor’s tax deduction may not exceed $60. Because the donor’s payment (quid pro quo

contribution) exceeds $75, the charitable organization must furnish a disclosure statement

to the donor, even though the deductible amount doesn’t exceed $75.

A required written disclosure statement must:

 inform a donor that the amount of the contribution that is deductible for federal income

tax purposes is limited to the excess of money (and the fair market value of property other

than money) contributed by the donor over the value of goods or services provided by the

organization

 provide a donor with a good-faith estimate of the fair market value of the goods or services

An organization must furnish a disclosure statement in connection with either the

solicitation or the receipt of the quid pro quo contribution. The statement must be in

writing and must be made in a manner that is likely to come to the attention of the donor.

For example, a disclosure in small print within a larger document might not meet this

requirement.

Exception

A written disclosure statement is not required:

 where the goods or services given to a donor meet the “token exception,” the “membership

benets exception” or the “intangible religious benets exception” described earlier

 where there is no donative element involved in a particular transaction, such as in a typical

museum gift shop sale

Penalty

A penalty is imposed on charities that do not meet the written disclosure requirement. The

penalty is $10 per contribution, not to exceed $5,000 per fundraising event or mailing. An

organization may avoid the penalty if it can show that failure to meet the requirements was

due to reasonable cause.

Further Information

written acknowledgment — Detailed rules for contemporaneous written acknowledgments

are contained in Section 170(f)(8) of the Internal Revenue Code and Section 1.170A-13(f) of

the Income Tax Regulations. The “low-cost article” rules are in Code Section 513(h)(2).

written disclosure — Detailed rules for written disclosure statements are contained in

Code Section 6115 and I.T. Regulations Section 1.6115-1. The penalty rules are contained in

Code Section 6714.

IRS publications — Order publications by calling the IRS at (800) 829-3676. Download IRS

publications at www.irs.gov.

IRS customer service — Telephone assistance for general tax information is available by

calling IRS customer service toll-free at (800) 829-1040.

EO customer service — Telephone assistance specific to exempt organizations is available

by calling IRS Exempt Organizations customer account services toll-free at (877) 829-5500.

EO website — Visit Exempt Organizations website at irs.gov/eo.

EO Update — Subscribe to IRS Exempt Organizations’ EO Update, a regular email

newsletter with information for tax-exempt organizations and tax practitioners who

represent them.

StayExempt — An IRS interactive web-based training program covering tax compliance

issues confronted by small and mid-sized tax-exempt organizations.