I was wondering if anyone has created an acknowledgement letter that simply states the amount of the gift donated by an individual or foundation and does not specify the tax-deductible portion of the gift?
We are considering doing this and we would then provide donors with a listing of all benefits we offer and the dollar values associated with these benefits. In the acknowledgement letter, a disclaimer would be included and read something along the lines of: “Please consult your tax attorney for the tax-deductible portion of your gift.”
Does anyone do anything along these lines? If so, how is it working?
Thanks!
Hi Melissa,
We've worked on our acknowledgement letters over the past few years. Per the IRS, you must provide your patrons with the fair market value of their donation. (Stock gifts are slightly different and I know there are a few threads on these forums about that if you would like more information.)
To protect the Center and as we are not tax advisors, we do not explicitly state the specific tax-deductible amount; instead, we provide the FMV associated with their gift. It is up to the donor and their tax advisor to determine how to apply the deduction to their personal situations. (Also, a donor must accept all or none of the benefits at the time the gift is made ... they cannot accept some of the benefits and not others in order to adjust the deductibility of their gift nor can they change their mine part-way through the membership.)
We also send a listing of the benefits they receive with their gift, though I would caution against including the itemized breakdown of fair market values that you have assigned to each line item. This can be very confusing to your donors and may open the door to complaints about how you have valued the membership. We only provide this information upon request when a giving officer can have a one-on-one conversation with the patron to explain our rationale. We keep an extensive grid for our internal reference, but typically only provide the total fair market value to the donors.
Here are examples of the language we are currently using.
Thank you for your recent gift/pledge payment of $x.xx on DATE to PROGRAM NAME.
When donations are fully tax-deductible (Note: we do not state "your gift is fully tax-deductible." We used to, but changed that after some conversations with our advisors.):
No goods or services have been provided by Segerstrom Center for the Arts in consideration of this contribution.
Segerstrom Center for the Arts is a non-profit tax-exempt organization under section 501(c)(3) of the Internal Revenue Code - Tax Identification Number 23-7287150.
Please retain this acknowledgement for your tax records.
When there is a fair market value associated with the donation:
In compliance with the Internal Revenue Service, a charity must determine the market value of benefits and list the deductible and non-deductible amounts for contributions. Segerstrom Center for the Arts estimates the fair market value of Membership Level/Program Name membership services and events at $x.xx per year.
Segerstrom Center advises you to seek your own legal and tax advice in connection with gift and planning matters. The Center does not provide legal or tax advice. This communication (including any attachments) may not be used for the purpose of avoiding tax related penalties.
Segerstrom Center for the Arts is a non-profit tax-exempt organization under section 501(c)(3) of the Internal Revenue Code Tax Identification Number 23-7287150.
I hope this information helps you in your decision. Please feel free to contact me should you have any questions.
Amber NewsomeSegerstrom Center for the ArtsManager, Special Campaigns(714) 556-2122 ext. 4259ANewsome@SCFTA.org
Thanks, this is great information.