Tips to Prepare Tax Statements for 2019

Membership, donor cultivation and stewardship, tax statements

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Year-end is not just a busy fundraising time, it’s also time to start planning for tax receipts in the new year. And while best practice often isn't asking for a gift with the statement, this is an opportunity to thank your major, mid-level, and sustaining donors for a year of support.

As reported for 2018, the Tax Cuts and Jobs Act of 2017 has made no significant changes that should impact the compliance component of the tax statements provided to donors. However, compliance isn’t the only concern. The standard deduction requirements will affect overall charitable giving. Tax experts and fundraisers alike are still watching this unfold two years later. The Giving USA report in June found giving by individuals totaled an estimated $292.09 billion, declining 1.1% in 2018 (a decrease of 3.4%, adjusted for inflation). While this decrease can’t necessarily be tied to the changes in the tax law, it certainly was a part of economic variables and uncertainty nonprofits experienced in 2018.

The strength of public media is that our supporters use and place a high value on the service stations provide. So, with that lens, strengthening that connection by practicing good stewardship is paramount.

Review the Rules

Review the IRS Guide for Charitable Contributions: Substantiation and Disclosure Requirements (Publication 1771). It’s important to take a look before you get started so you’re up to speed. Publication 1771 was last updated 03/2016.

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tax receipts

Here’s the top-line data for preparing statements for 2019:

Donors are responsible for maintaining a bank record or written communication for donations of less than $250 and a written acknowledgement from the donee for donations of $250 or more for which they intend to claim a deduction on their tax return.

Your station or organization is responsible for providing written disclosure to donors who receive goods or services in exchange for a single donation of $75 or more.

There is a “Token Exception” for “insubstantial goods or services” (such as a thank-you gift). To be deemed insubstantial, the Fair Market Value can not exceed the lesser of 2% of the payment or $111; or...

Meets the following criteria: The donation is at least $55.50, and the thank-you gift bears your station’s name and/or logo and is valued at no more than $11.10.

Your station is required to provide a written disclosure or receipt for donations of $75 or more that are partly for goods or services and partly for a donation. (The IRS uses concert tickets as an example.) This is referred to as a “Quid Pro Quo” contribution.

To review these details, see IRS Memo RP-18-57- Page 21, section .34.

What information should you include on a tax statement? According to IRS Guide for Charitable Contributions: Substantiation and Disclosure Requirements, the IRS requires the following information:

  1. The name of organization
  2. The amount of cash contribution
  3. A description (but not the value) of non-cash contribution
  4. A statement that no goods or services were provided by the organization in return for the contribution, if that was the case; or a description and good faith estimate of the value of goods or services, if any, that an organization provided in return for the contribution.

Other details from the IRS:

  • A separate acknowledgment may be provided for each single contribution of $250 or more, or one acknowledgment, such as an annual summary, may be used to substantiate several single contributions of $250 or more.

  • There are no IRS forms for the acknowledgment. Letters, postcards or computer-generated forms with the above information are acceptable. (Most stations now send statements electronically or as a direct mail letter. We do not recommend postcards).

  • An organization can provide either a paper copy of the acknowledgment to the donor, or an organization can provide the acknowledgment electronically, such as via an email addressed to the donor.

And, of course, you should consult with your tax preparer or counsel before instituting these recommendations. It’s become more difficult to locate this information in IRS memos and briefs than in previous years.

To ask or not to ask? Do you solicit a gift with your tax statements?

In a quick survey of stations, most said they do not solicit a gift in a tax statement. Of those who did, most often it was done as an upgrade request to sustaining members, or a business reply envelope was included without any formal request. We recommend using tax statements primarily as a valuable stewardship opportunity to connect with and thank donors for their support. Even better is to include a thank-you a separate note or letter with the statement outlining the value of the donor’s support and looking forward to their continued partnership with your station.

tax receipts

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