Q: Before the beginning of each school year, our church holds a back-to-school backpack drive where members purchase new backpacks for children in need. If a member spends $100 on backpacks for the drive, should the church include this noncash donation on the donor statement?
Noncash contributions should not be included in regular donor statements. Instead, qualifying receipts for noncash donations should be issued separately. This ensures compliance with IRS guidelines and provides donors with the appropriate documentation for their records.
Guidelines for Issuing Noncash Donation Receipts
1. Separate Noncash Receipts from Cash Statements
Noncash donations require their own receipt, separate from regular cash donation statements. Mixing noncash contributions with cash receipts can lead to incomplete or inaccurate records.
2. Include a Complete Description
Receipts for noncash donations must provide a full description of the donated items. Courts have ruled that insufficient descriptions can disqualify a donation from being claimed as a deduction. For example, describe the items as “10 new backpacks” instead of “school supplies.”
3. Exclude Monetary Values
Noncash donation receipts should not include a dollar value, even if the donor submits a receipt showing the purchase price. Determining the value of noncash donations is the donor’s responsibility.
4. Include the “No Goods or Services” Statement
Like cash donation receipts, noncash donation receipts should include a statement confirming that no goods or services were provided in exchange for the donation. This is a required element for tax-deductible contributions.
Best Practices for Churches
To streamline the process and ensure compliance:
- Use separate systems or templates for noncash donation receipts to accommodate the detailed descriptions required.
- Train staff and volunteers on the specific requirements for issuing noncash donation receipts.
- Encourage donors to retain their purchase receipts and provide a copy for church records if needed.
For more details on charitable contributions, visit the IRS Charitable Contributions page or explore the guidelines provided by the Evangelical Council for Financial Accountability.
FAQ: Charitable Contribution Statements
- Can noncash donations be included in regular donor statements?
No, noncash donations should be issued separate receipts with detailed descriptions. - What should a noncash donation receipt include?
A complete description of the donated item(s) and a statement confirming no goods or services were received in return. - Should the receipt show the monetary value of the noncash donation?
No, it is the donor’s responsibility to determine the value of noncash contributions. - Why are detailed descriptions important?
Courts have disallowed deductions for donations with insufficient descriptions, making this a critical compliance requirement.
