Contributions are the foundation upon which your organization operates and exists. As you know, they play a tremendous role. Managing them, stewarding them, and accounting for them within the fund accounting framework requires time and organization. If you are like me, many questions emerge as time goes on. Below you will find answers to some basic contribution questions.
What are some laws that I need to familiarize myself with regarding donor receipts?
Beginning in January of 2007, the IRS changed the way charitable donations receive tax credit for individuals. Before that date, your check registers or personal notations were sufficient. Now all donations require proof of the deductions. A bank record for this record-keeping requirement includes bank or credit union statements, canceled checks, or credit card statements. They must show the date paid or posted, the name of the charity, and the amount of the payment.
Donors will not be allowed a tax deduction for any individual cash (or property) contribution of $250 or more without receiving a written statement from the church or nonprofit. For more specific information on types of contributions, click here.
What information is required on the documentation sent to donors?
The contribution statement must include the Church’s or Nonprofit’s name, the contributor’s name, the date(s) of the donation(s), and the amount(s).
Also included must be an explanation about whether the charity provided any goods or services to the donor for the donation. If no goods or services were provided, noting such would be important. Include a statement such as the following: “You did not receive any goods or services in connection with these contributions other than intangible religious benefits”.
An annual contribution statement ensures this requirement. Aplos creates one of these automatically for you.
When should I send my annual contribution statement?
Your donors should receive a receipt from you no later than the due date of the individuals’ tax return.
However, I encourage you to issue your receipts by January 31st each year, especially if you issue then on a yearly basis. Be considerate to your donors and give them the information they need to file this portion of the taxes in a timely fashion.
In terms of frequence, your donation receipts or statements can be issued gift-by-gift, monthly, quarterly, annually, or any other frequency. You may decide according to what best suits your organization.
More questions answered on the next post.
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