Donations
Donations are the financial life blood of your organization.Knowing how to properly handle, record, and acknowledge those contributions is essential!
Donations Guidelines ...
1. Contributions to individuals are not tax deductible and should not be included in your annual contribution statements. See this page on donations to individuals for more details.
2. Are you are required by law to send out or give contribution receipts? According
to the IRS Pub 1771: The donor is responsible for obtaining a written
acknowledgment from a charity for any single contribution of $250 or more
before the donor can claim a charitable contribution on their federal
income tax return. Make sure your written acknowledgments have all of the required information on them. See this page on
contributions receipts.
3. Noncash contribution are handled different than cash contribution. You need to send out a separate receipt for all noncash contribution with the required information included:
- Church's or Nonprofit's name
- Donor's name
- Date(s) of the donation(s)
- Disclaimer regarding whether or not goods or services were provided or exchanged for the contribution
- Description of donated item including what condition it was in.
Most of the time, you will not include a value on the receipt. See this page for an example of a noncash contribution receipt.
Note: There are extra documentation required for contributions of qualified vehicles (including automobiles, boats, and airplanes). If you need details on these types of donations, please research the IRS website or purchase Church Contributions It includes step-step-instructions on handling these types of contributions.
New Donation Scam!
Alert: There is another scam targeting churches and nonprofit organizations!
Someone calls your organization in a panic and states that they accidentally hit an extra zero when processing their online donation and their $200 donation processed for $2,000! You reassure them you will take care of it immediately!
You check your online donations and sure enough their $2,000 donation is sitting in there, so you immediately process a refund for $1,800.
A couple days later you get a notice that the $2,000 donation was rejected due to insufficient funds in their account. You try to call the caller back and find their number has been disconnected.
There are some evil people in this world...but there are also some honest people that make honest mistakes. I had a client that one of their donor's accidentally put one too many zeros in her $50 donation check. My staff caught it as she had written fifty on the written part...which is what the bank is suppose to go by...but the bank processed it for $500 anyway. So the church immediately issued her a $450 refund.
There are steps you can take to ensure you will not become a victim to scams such as this one:
1. Be familiar with donors! In the example above, the scammer was NOT a "regular" donor. That would set off the first alarm bell!
2. Never process a refund until the donation has completely cleared the bank!
3. If possible, have a team or person familiar with current scams handle all refunds or any "requests" that don't feel quite right to you.
Learn more ...
Accurately tracking and managing contributions is a must for any nonprofit organization. See when and how you should issue contribution receipts...
See an example of a contribution statement and the five essential elements it should contain...
Gifts in-kind are donations of items, use of property, and professional services. Accounting for those non cash donations can oftentimes be confusing.
See how to acknowledge and account for those donated goods and services...
Knowing WHEN to issue contribution receipts is something every organization that accepts donations should research. Knowing when NOT to issue those charitable contribution receipts may be even more important! …
Most of the time, contributions to an individual do not qualify as charitable contribution, and the IRS does not allow a tax deduction for them...
Church Accounting Package
A set of 4 ebooks that covers the following topics...
- Fund Accounting Examples and Explanations
- Setting up a fund accounting system
- Donation management
- Minister compensation and taxes
- Internal controls and staff reimbursements
- Much more - Click here for details
Churches, both large and small, are experiencing a growing demand to accept giving electronically. See how to start and set up online giving...
How to Accept Online Giving
Love offerings (gifts) are complex issues for church administrators. See some guidelines in handling love offerings...
The greatest advantage of having a benevolence fund program properly set up is to ensure contributions to that plan will be considered tax-deductible and comply with IRS regulations...
Want a quick and easy way to track your donors and record contributions and deposits in one easy step? Need an online donation setup that will make it easy for your donors to give securely online plus save time by automatically integrating those contributions into your accounting software? See this user-friendly donor management and accounting software ...
Do you know when to issue a contribution receipt and when not to? How about a written disclosure? Are you staying IRS compliant with your charitable contributions? All these charitable contribution questions and much more are answered in this ebook ...
Need a database that is easy to use and understand and affordable?
Shepherdbase provides churches with a simple and easy solution to track church contribution records and membership information.
Spreadsheet Package
The Spreadsheet Package includes:
- Contribution Tracking Workbook
- 5 Fund Automatic Accounting Workbook
- Bank Reconciliation Workbook
- Collection Count Sheet
- Mileage Log Workbook
- Much more - Click here for details
PLUS a Word document with 3 examples of contribution statements for cash, non cash, and quid pro quo donations that you can customize for your own use!
Need training on how to use QBO or Aplos effectively for a church or better yet ...need an expert in either of those accounting software to do your monthly bookkeeping and/or payroll? See more on our accounting services!
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