Form 1023 Paperwork, In Millions of Hours, 1986 to 2016
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Real Help With Your 501(c)(3) Application
Prepare Your Own 501(c)(3) Application
By Sandy Deja © 2016 400 pages ISBN 978-0-9815280-9-0
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(available in pdf as well; send email request)
Three sets of IRS tax rules govern how a 501(c)(3) organization must acknowledge payments from donors:
I. Section 170(f)(8) of the Internal Revenue Code disallows any contribution of $250 or more unless the taxpayer has contemporaneous written substantiation of the donation from the charitable recipient. There is no IRS penalty to the charity for failing to provide donors with this written substantiation.
II. Section 6115 of the Internal Revenue Code requires charities to provide donors with a good faith estimate of the value of goods or services provided where a payment of more than $75 is received which is partly a contribution, and partly consideration for goods or services. The penalty for failure to provide the required allocation is $10 per contribution, with a maximum penalty of $5,000 per fundraising event.
III. Revenue Procedure 90-12 provides that insubstantial benefits provided to donors may be disregarded, for purposes of determining the deductible amount, when (i) the fair market value of all the benefits is not more than 2% of the total payment, or $106, whichever is less, or (ii) the contribution is $53.00 or more, and benefits are only name- or logo- bearing tokens with a cost of $10.60 or less (The amounts here are for 2016. New amounts, indexed to inflation, are announced annually.)
This website has only a fraction of the information you can find in Prepare Your Own 501(c)(3) Application.
Taken together, IRS rules require that an organization's written acknowledgments to donors should contain at least:
The information outlined must be provided
These rules do not apply when there is no gift or donation intended, such as a purchase in a museum gift shop. No estimate of the value of services provided is required where the recipient organization is exclusively religious, and the only benefits are "intangible religious benefits."
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