Q&A: Will a Plaque Recognizing a Donor's Contribution Prohibit a Tax Deduction?

A member of our church made a substantial contribution for the erection of a stained glass window in our sanctuary. We would like to insert a small plaque recognizing the donor by name. A board member insists that doing so will preclude a charitable contribution deduction. Is this true?

The Internal Revenue Service (IRS) has observed:

Payments an exempt organization receives from donors are nontaxable contributions where there is no expectation that the organization will provide a substantial return benefit. Mere recognition of a . . . contributor as a benefactor normally is incidental to the contribution and not of sufficient value to the contributor to [preclude a charitable contribution deduction]. Examples of mere recognition [that do not nullify a charitable contribution deduction] are naming a . . . building after a benefactor" (IRS News Release IR-92-4).

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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