Maintaining Goodwill with Your Donors by Documenting Their Gifts (Part 3 of 4)
So far in our series, we’ve discussed general rules for documenting charitable donations and the specific details of doing so with cash gifts; this week, we’ll cover non-cash gifts and their documentation requirements.
Non-cash gifts (tangible items, real estate or securities) worth up to $500 require only basic support. They have the same documentation requirements, plus a description of the item(s) donated, but not necessarily a value. Clothing and household items must be in good used condition or better, but if an item has been appraised, condition isn’t important.
Unreimbursed expenses fall into this category and require the same acknowledgement, including a good faith estimate of their values, to be deductible by the donor. The donor should submit an expense report and have it approved by your charity to cover the documentation requirement. With this receipt, expenses qualify if they exceed $250. Remember: the charitable mileage rate is only 14 cents, different from the business expense rate.
Donors must document non-cash gifts in excess of $500 with a Form 8283 attached to the tax return, providing specifics of items donated and their value. Organizations accepting donations of vehicles must provide a specific receipt on Form 1098-C, which can be issued only after the vehicle is sold. The exception occurs when the vehicle is used by the charity or transferred to the needy as a part of its mission, in which case the value must be documented (see IRS Pub 4302 – A Charity’s Guide to Vehicle Donations).
Non-cash gifts in excess of $5,000 require a qualified independent appraisal (find valuation guidance in IRS Pub 561). They cannot be valued by parties related to the transfer and must be contemporaneous to the transfer date.
If you have any questions about non-cash charitable donations or any other related topics, please contact Online Stewardship at (904) 398-4747 or lynn@onlinestewardship.com.
