For any portion of the payment to be considered tax-deductible, the IRS
requires you to make a "good faith estimate" as to the fair market value of
all benefits received. So your first mission, should you decide to accept
it, is to do that.
Once you have the FMV and publicize that, then any payment made over that
amount would be tax-deductible, and you would have to issue a QPQ receipt.
But the reality is that very few of your donors - if any - will itemize
their deductions and therefore won't need a receipt anyway. The most
recent estimates after the first year of the higher standard deduction are
that only 8% of taxpayers will itemize. I would not go through all of this
effort in trying to determine a net deductible amount - especially for so
very few donors and dollars. *Instead*, advertise this as an "All proceeds
to benefit" event, and your participants will still attend and feel good
about it!
John
John H. Taylor
Principal
John H. Taylor Consulting, LLC
2604 Sevier St.
Durham, NC 27705
johntaylorconsulting@gmail.com
919.816.5903 (cell/text)
Serving the Advancement Community Since 1987
On Thu, Aug 22, 2019 at 4:57 PM Jennifer Morgan <
jennifer.morgan304@gmail.com> wrote:
> I'm not even sure how to put this out there...
>
> My question relates to fundraisers that my organization (senior living
> 501c3) helps coordinate/facilitate for our team in a local "walk" event
> sponsored by another 501c#. This may sound trivial, but it has been causing
> confusion and concern amongst some of our residents.
>
> We host a "Tomato Sandwich Lunch" that support our team's fundraising. The
> cost of the lunch is $10 and the items included are sandwich, fruit, chips,
> cookies, and soda. It is "all you can eat" until the food is gone. Some pay
> $10 cash - some write a check for $10 - some write a check for $100. All
> proceeds benefit the walk non-profit. The cash is cash but the checks have
> been processed by the organization and have all received acknowledgment and
> tax receipt letters. Hence folks here now think if they write a check it's
> tax-deductible.
>
> I know this is small in the larger FMV conversations that have been
> discussed. But the $10 checks should not receive a tax letter as the FMV of
> the lunch is certainly the same or more than what they have paid. My
> instinct is to let folks know that unless they give a check that is
> strictly designated as a gift they will not be tax-deductible. If paying
> just for lunch then they just are getting lunch.
>
> We have a basket raffle as well and that is MUCH simpler providing an
> explanation as to why their checks to purchase tickets is not
> tax-deductible.
>
> Thanks for wading through this...all advice on how to best communicate
> this is appreciated.
>
> Jennifer Morgan
>
>