How should the nonprofit treasurer handle donations?
All nonprofit gift acknowledgements should contain:
- A statement that the nonprofit is a charity recognized as a tax-exempt organization by the IRS under Section 501(c)(3);
- Either (a) amount donated (if cash or cash equivalents), or (b) description of the property donated (the nonprofit should not attempt to assign cash value of the property in the letter – that’s the donor’s responsibility);
- The date the donation was received — either (a) statement whether your organization provided any goods or services in return for the donation, such as “No goods or services were received in return for this gift”, or (b) if the gift was $75 or more and the nonprofit did provide something of more than insubstantial benefit in return for the gift (such as a ticket to a special event), then the charity must include a good faith estimate of the value of the goods/services provided. This could be something like the market value of tickets to the event or the actual cost of dinner – even if it was donated.
- Some states require a disclosure statement on written solicitations. Be sure to check with your state to know what’s required.
- Quid Pro Quo donations: as described above, when a donor contributes $75 or more and receives something of value in return, it’s called a “quid pro quo” gift or donation. This essentially means the donor received something in return for the donation. To learn more about Quid Pro Quo gifts, visit the topic on the IRS Website.
For more information about nonprofit setup, Ohio University has published this extensive guide.