When and how to issue charitable contribution receipts can be challenging sometimes. Since contributions are essential for a church or nonprofit's survival and growth, knowing how to handle those donations is important.
You need to know:
See the answers to those questions here: Handling Contributions
Below is a some additional questions that my readers have sent me throughout the years...
1. Do I have to send out a separate contribution receipt for all individual contributions over $250?
Opinions really vary on this subject. I have read several conflicting articles on this subject; however, the IRS states in their Pub 1771:
"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."
So according to the IRS, you can either issue a single contribution receipt for each contribution of $250 or more, or you can attach an itemized statement to the donor's annual contribution statement...whichever works best for you and your donors.
2. Is there a special form I have to fill out if we receive more than $10,000 throughout the year from one individual?
No. You may be thinking of IRS Form 8300 (Report of Cash Payments Over $10,000 Received in a Trade or Business), but that form does not apply to charitable contributions. See the IRS’s Pub 557:
"An exempt organization that receives, in the course of its activities, more than $10,000 cash in one transaction (or two or more related transactions) that is not a charitable contribution must report the transaction to the IRS on Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business.”
3. Can we issue a charitable contribution receipt for a business discounts?
Often businesses will give churches discounts on their merchandise. Some will then turn around and ask your church for a charitable contribution receipt for the difference between the price they let the church pay and what they normally sell their product for.
No, you cannot issue contribution receipts for donated discounts.
See this post for an example of that issue and the comments: Discounted Merchandise Donation
4. Our landlord does not charge us his usual rate for the building we are renting for our church services. Can we issue a contribution receipt for the donated rent?
I am asked this question quite often. Sadly, the answer is no. You cannot issue a contribution receipt for discounted or even free rent per the IRS guidelines.
See IRS Pub 526, page 9: Partial Interest in Property
An example of this nondeductible gift is:
A businessman owns a nice building on Main Street. He lets ABC Church use it completely rent-free. All he asks for is a contribution receipt for the rent that he would be normally be charging.
According to the IRS Publication 526, you cannot issue him a receipt because:
"he still owns the building and has a partial interest in the property; therefore, his donation is not tax-deductible."
This same rule applies to the donation of equipment. See this post: Non-Cash Donation of Equipment
Q and A Section below...
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The following comments, tips, and Q/A were provided by FreeChurchAccounting's generous readers:
May the End of Year Contribution Letter Contain the word "Tithe"?
There is a visitor in the church that will not accept our Contribution Letter for the reason that it ONly contains the words Gifts/Contributions. They …
deceased member's estate gave money to church
How should we treat the donation? Who do we send a receipt if any?
Saving checks or just the receipts?
When we purchase items with a church check from Wal-Mart, they run the check through their system and I sign the electronic pad. I am given the receipt …
Expenses paid on behalf of church
We frequently have people who pay expenses for the church out of their pocket, say for instance while on a mission trip. They never want to get reimbursed …
The comments above are for general information purposes only and do not constitute legal or other professional advice on any subject matter. See full disclaimer.
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