Archive for April 24, 2014

Written Acknowledgements for Donors

As a tax-exempt entity, you are provided with the privilege of receiving charitable donations from the general public; however you are also responsible for complying with federal laws applicable to charities and churches that receive such tax-deductible donations.  These rules exist for not-for-profit entities in order to facilitate the strict recordkeeping and substantiation requirements imposed on donors, in order to receive a tax deduction on his/her federal income tax return.

Rules for donors:  A donor must have a bank record or written communication from a charity for any contribution before taking a tax deduction.  A donor is responsible for obtaining a written acknowledgement from a charity for any single donation of $250 or more.  For in-kind donations, the donor is responsible for obtaining/assigning the fair market value of the donated item.

Written Acknowledgements for gifts over $250

While this requirement is technically the donor’s responsibility, the donor may not claim a tax deduction without this written acknowledgement.  Therefore, to best serve its generous supporters, the organization should provide a timely statement containing the following information:

  • Name of Organization
  • Amount of cash contribution
  • Description (but NOT the fair value) of non-cash donations
  • Statement that no goods or services were provided by the organization in return for the contribution (if that is a factual statement)
  • Description and good faith estimate of the value of goods or services, if any, that an organization provided in return for the contribution (commonly referred to as “Quid Pro Quo” – see below)
  • All acknowledgements should be contemporaneous – typically no later than January 31st  of the calendar year following the donation. Best practice would be to provide this acknowledgement within 30 days of receiving the gift.
Written Disclosure for Quid Pro Quo

When a charity provides any goods or services in exchange for a donation, this is partly an exchange transaction and partly a contribution.  A donor may only take a contribution deduction to the extent that the contribution exceeds the fair market value of the goods or services received.  It is the organization’s responsibility to provide the estimated fair market value, which must be in writing if the original payment exceeds $75. Penalties may be assessed if an organization does not meet the written disclosure requirement. The penalty is $10 per contribution, not to exceed $5,000 per fundraising event or mailing.

The written disclosure statement must:

  • Inform the donor that the amount of the contribution that is eligible for deduction for federal income tax purposes is limited to the excess of money (and fair market value of property other than money) contributed by the donor over the value of goods and services provided by the organization.
  • Provide the donor with a good-faith estimate of the fair value of the goods or services provided by the organization.
  • Be in writing and be made in a manner that is likely to come to the attention of the donor.  The statement may be included in the solicitation of the donation or provided along with a receipt of the donation.

There are exceptions for certain “token gifts” and “intangible religious benefits” which are received by the donor in exchange of gifts, in which case written acknowledgements are not required.

Other:

  • Unreimbursed expenses may be another form of contribution, such as out of pocket transportation expenses in order to perform donated services or provided supplies for a program activity.  In this case, the donor must obtain a written acknowledgement from the organization containing the same information listed above for donations over $250, except it also should include a description of the goods or services provided by the donor.
  • Non-cash donations with claimed fair market value greater than $5,000 generally require a qualified appraisal, which is the responsibility of the donor, not the charity.

Jeanne Pagnozzi Boston AccountantJeanne Pagnozzi is a manager in BlumShapiro’s Accounting and Auditing Department, based in Quincy, Massachusetts, Jeanne oversees attest and tax engagements and is responsible for engagement planning, staff supervision and coordination with client personnel to ensure successful completion of projects.

 

Top 10 Twitter Accounts to Follow for Non-Profit Organizations

Twitter for Non-profit OrganizationsTwitter has been taking the world by storm, but it’s not just for entertainment artists and your teenage children.  There are many non-profit organizations and groups that support non-profit organizations that are on Twitter, using it to spread their message and keep their followers up-to-date on current news and events.

Top 10 Non-Profit Twitter Accounts to Follow

Here’s a list of the top 10 (actually 11) non-profit related Twitter Handles (Twitter’s cool slang for ‘Name’ or ‘ID’):

  • @SM4Nonprofits – Social Media for Non-profits is the world’s only conference series dedicated to social media for social good and to date has earned a 92% approval rating from over 2,500 non-profit leaders across the USA.
  • @NonprofitOrgs – The mission of this Twitter profile is to serve as a portal to all non-profit organizations on Twitter.
  • @NonProfitTimes – The leading business publication for non-profit management.  News, Special Reports, Jobs and Expert Advice for the non-profit Sector.
  • @Philanthropy – The Chronicle of Philanthropy’s official Twitter page, dispensing news, advice and commentary about the non-profit industry.
  • @GuideStarUSA – GuideStar gathers and disseminates information about every single IRS-registered non-profit organization.  It provides as much information as it can about each non-profit’s mission, legitimacy, impact, reputation, finances, programs, transparency, governance and more.
  • @IRSnews – IRS news and guidance for the public, press and practitioners.
  • @AFPIHQ – Association of Fundraising Professionals (AFP) – Since 1960, AFP has inspired global change and supported efforts that generated over $1 trillion. AFP’s nearly 30,000 members raise over $100 billion annually.
  • @NTEN – Tips, resources and even live webinar coverage (#NTENlearn) about all things about non-profit technology.
  • @SSIReview – Social Innovation.  Informing and inspiring leaders of social change.
  •   @AICPA – The American Institute of Certified Public Accountants. Follow this account for accounting news, Institute announcements and other updates.
  • @AccuFund – AccuFund provides top-rated accounting and fundraising solutions designed exclusively for the nonprofit industry. (In the interest of full disclosure, this is a biased one, as AccuFund is a product the Business Solutions division of our consulting practice represents.)

Sean Niland, Intacct ConsultantSean Niland is a manager in our Consulting Group, Sean provides implementation, conversion assistance, training and ongoing support for the firm’s clients.  His industry experience includes privately held businesses such as hospitality and professional service firms; non-profit organizations such as health and human service agencies and arts and cultural organizations; and municipalities.

Sean is certified in Intacct, AccuFund and Tagetik.