Q&A: What Counts as a Tax-Deductible Donation?

What is—and isn’t—tax-deductible for donors who attend a church fundraising event.

Our youth group hosted a spaghetti dinner to raise money for hurricane disaster relief. How do we determine what is a donation and what is payment for the spaghetti dinner, or can a donor’s entire check for the dinner work as a tax-deductible donation?

If the understanding with the participants was that the “price” of the dinner was a donation of any amount, the Internal Revenue Service considers this to be a quid pro quo arrangement. Under such an arrangement, the value of the dinner (not the dinner’s actual cost) is what you use to determine the nondeductible amount. In making that determination, the law allows you to make a “good faith estimate.” For instance, you could say that the value of the dinner is worth what a comparable meal would cost at Fazoli’s.
However, if the understanding was that it was a free dinner and an “ask” was made for contributions at the dinner, it is not a quid pro quo arrangement, and the entire amount donated by each participant is tax deductible.
Note that the requirement to issue a proper receipt for the quid pro quo arrangement applies only to payments by donors of more than $75. Further, the law allows you to ignore the quid pro quo arrangement if the value of items received in exchange is 2 percent or less of the gift amount—up to $107 for the value of items received in exchange. The amount is inflation-adjusted each year.
For IRS guidelines on issuing a proper receipt for a quid pro quo arrangement, go to IRS.gov and search “quid pro quo contributions.” You’ll also find guidelines for issuing receipts for quid pro quo arrangements, along with guidelines for issuing receipts for donations over $250 that aren’t quid pro quo, in chapter 8 of the Church & Clergy Tax Guide.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations." Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

ajax-loader-largecaret-downcloseHamburger Menuicon_amazonApple PodcastsBio Iconicon_cards_grid_caretChild Abuse Reporting Laws by State IconChurchSalary Iconicon_facebookGoogle Podcastsicon_instagramLegal Library IconLegal Library Iconicon_linkedinLock IconMegaphone IconOnline Learning IconPodcast IconRecent Legal Developments IconRecommended Reading IconRSS IconSubmiticon_select-arrowSpotify IconAlaska State MapAlabama State MapArkansas State MapArizona State MapCalifornia State MapColorado State MapConnecticut State MapWashington DC State MapDelaware State MapFederal MapFlorida State MapGeorgia State MapHawaii State MapIowa State MapIdaho State MapIllinois State MapIndiana State MapKansas State MapKentucky State MapLouisiana State MapMassachusetts State MapMaryland State MapMaine State MapMichigan State MapMinnesota State MapMissouri State MapMississippi State MapMontana State MapMulti State MapNorth Carolina State MapNorth Dakota State MapNebraska State MapNew Hampshire State MapNew Jersey State MapNew Mexico IconNevada State MapNew York State MapOhio State MapOklahoma State MapOregon State MapPennsylvania State MapRhode Island State MapSouth Carolina State MapSouth Dakota State MapTennessee State MapTexas State MapUtah State MapVirginia State MapVermont State MapWashington State MapWisconsin State MapWest Virginia State MapWyoming State IconShopping Cart IconTax Calendar Iconicon_twitteryoutubepauseplay