FundSvcs Community

 View Only
Back to discussions
Expand all | Collapse all

Token stickers, mailing costs, and size of gift

  • 1.  Token stickers, mailing costs, and size of gift

    Posted 05-27-2026 08:54 AM

    Hello friends,

    Token benefits have reared their delightful heads again and while I thought I had finally gotten to a place where I understood them, I have new questions. Or the same old questions, just in new clothing.

    1. Should the cost of mailing token benefits be included in the benefit? We are looking to mail branded stickers (cost to us, less than $1) but when the mailing price is factored in, I'm being told the benefit is $9 (I'm following up on why the shipping cost is so high). I don't think I've ever factored in delivery costs before.
    2. My understanding is that the value of token benefits a donor can receive in 2026 must not exceed $13.90, for a gift totaling at least $69.50. What I'm telling my direct response folks is that in order to receive this $9 benefit without it impacting a donor's fully tax deductible gift, they have to give a gift of at least $69.50. If they give less than that, their receipt needs to reflect that their deductible portion is $9 less than the gift amount.
      But even if I only factor in the stickers, am I really saying that for gifts less than $69.50, I'm benefiting out $1 on their receipt?
    3. And then there's the recurring gift component. I said that I'm not comfortable providing a sticker for the first payment of a recurring gift that's less than $69.50, without benefiting it out on the receipt. If the donor were to give $69.50+ as part of their recurring giving, is a new receipt needed for that initial gift? Of course, our other option is to do an annual receipt and make a determination then about whether we need to benefit out the sticker.
    4. And if that's all correct, what's the point of having the logo vs not logo? Isn't it the logo that makes this fall into the token benefit category? I'm questioning so many life choices right now...

    Thanks to this special hive for your help and understanding. I feel the solidarity just in writing this.

    Elizabeth



    ------------------------------
    Elizabeth Tavares
    Director, Donor Revenue Management & Records
    UNICEF USA
    ------------------------------


  • 2.  RE: Token stickers, mailing costs, and size of gift

    Posted 05-27-2026 09:11 AM
    1. No. You do not need to factor in the cost of mailing. Just like you don't need to factor in the costs associated with processing the gift when it is received and processed. It's the "fair market value" of the benefit - what a willing buyer would pay a willing seller.
    2. You are correct regarding the fact that in order to receive the token benefit, a minimum gift of $69.50 is required. Anything less is subject to standard quid pro quo receipting requirements.
    3. When the IRS created its QPQ rules back in the 70s, they did so assuming a 1:1 exchange (one gift and one benefit). So, I asked the IRS a long time ago about the issue of recurring donations resulting in a benefit. Verbally, they offered the following guidance (something I mention in most of my IRS speeches:
    Always inform donors in advance
    • Best to issue an annual receipt for just these contributions (recurring donations)
    • Subtract the benefit from the first payment – assuming the payment amount exceeds the benefit value
    • Divide the benefit value by the number of expected payments and apply equally
      • But then you can have the issue of a donor reneging on their pledge
    And you are correct regarding token benefits and logos - but only to the extent regarding the nature of the token benefit. To qualify under the token rules, the actual benefit must contain either the UNICEF logo OR the name of the organization.

    John

    John H. Taylor, Principal
    John H. Taylor Consulting, LLC
    2604 Sevier Street
    Durham, NC     27705

    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987






  • 3.  RE: Token stickers, mailing costs, and size of gift

    Posted 05-27-2026 09:20 AM

    Thanks, John. I am spinning less now and will stand my ground.

    Elizabeth



    ------------------------------
    Elizabeth Tavares
    Director, Donor Revenue Management & Records
    UNICEF USA
    ------------------------------

    Original Message


  • 4.  RE: Token stickers, mailing costs, and size of gift

    Posted 05-27-2026 10:13 AM
    Elizabeth, a few more thoughts.

    1. If the sticker is $1, you can disregard it for gifts of $50+ (2% of the gift). 
    2. For payments under $75, you don't need to provide a QPQ disclosure at all. That doesn't mean the benefit provided is disregarded - the donor is not entitled to deduct the value of the sticker - but it's not your obligation to provide the QPQ disclosure information. In the case of a $1 sticker, the whole thing is immaterial from a tax perspective anyway.
    3. This is the part that I think trips a lot of people up. There is a difference between the org's receipting obligations, the donor's substantiation requirements, and the deductibility. For QPQ under $75, you do not have a receipting obligation, and the donor does not need a contemporaneous written acknowledgement to take a deduction, but is still limited to deducting only the charitable component of the payment.
    4. QPQ receipts need to state that the donor can only deduct the excess of the donation over the FMV, and then provide a good faith estimate of the FMV. In the case of a recurring donation, you can add a statement that says 'When your giving for the year exceeds $XX, you may disregard the value of our gift to you for tax purposes.' That line can go on the receipt for each recurrence. 
    5. Another approach is to provide information on solicitation.The QPQ disclosure requirement, when it exists, can be met through notification at the time of solicitation, rather than on the receipt itself. You can indicate the FMV of your premiums in your solicitation, instead of on your receipt. 
    I prefer approach #4, but I've seen #5 used by orgs that do a lot of premiums. 




    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:





    Original Message


  • 5.  RE: Token stickers, mailing costs, and size of gift

    Posted 05-27-2026 10:41 AM
    Well, as for #5, there's a bit of a nuance. You are required to reflect the QPQ on a receipt, no matter what, if the payment is $75 or more (per Isaac's #3). And while no receipt is required if the payment is under $75, if you choose to issue a receipt (for tax purposes) anyway (as many do for positive donor relations), per Publication 1771, that receipt must reflect the QPQ.

    John H. Taylor, Principal
    John H. Taylor Consulting, LLC
    2604 Sevier Street
    Durham, NC     27705

    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987





    Original Message


  • 6.  RE: Token stickers, mailing costs, and size of gift

    Posted 05-27-2026 11:07 AM
    John, my read of 1771 may be a bit different from yours here. For payments of $75+ there is a Written Disclosure Requirement that can be met at solicitation or in connection with receiving the gift. That is entirely separate from the Contemporaneous Written Acknowledgement (the Ack) that the donor needs to substantiate a deduction of $250+. 

    For the donor to be able to deduct a gift over $250, the Ack needs to state the FMV, as you say. However, for gifts under $250, nothing bars a charity from providing an Ack that doesn't conform to the rules of an Ack for over $250. There is no rule saying if you send a receipt it has to contain x,y, orz. The donor will not need a conforming receipt to substantiate the deduction either, for under $250. I agree that it's a weird donut-hole, but there it is - you can fufill the Written Disclosure Req with notice at solicitation, and you don't have to provide FMV of the QPQ in the receipt, for gifts under $250.




    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:





    Original Message


  • 7.  RE: Token stickers, mailing costs, and size of gift

    Posted 05-27-2026 11:13 AM
    Elizabeth, one last bit. You can send the sticker if you don't name it as a premium, under the general exception that low-cost articles you send for free to people who haven't ordered them are considered insubstantial. 1171 lists mailing labels and greeting cards as examples of this sort of thing. Your $1 sticker feels like it qualifies.

    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:





    Original Message


  • 8.  RE: Token stickers, mailing costs, and size of gift

    Posted 06-02-2026 10:26 AM

    Thanks John and Isaac. I'm drafting a policy recommendation for Legal to review (who would have thought?) and want to make sure I'm not misunderstanding. I'm seeing dust in corners that I haven't noticed before...

    • A token benefit is a branded item with minimal value.
    • Token benefits can be provided to a donor if the combined value in 2026 is less than $13.90 for a gift that is at least $69.50.
      • If the gift is less than $69.50, the charity must disclose the cost of the benefit to the donor. This is most commonly done in the receipt.
      • There is not a one to one relationship between the item and the gift; if a donor makes a $70 gift in June and receives a $10 mug, they cannot make an $80 gift in September and receive the $5 socks. They are limited in their benefits received in a single calendar year; they cannot receive token items totaling more than $13.90 just because they gave additional gifts.
    • For non-token benefits, ie, more substantial benefits, donors are limited to $139 or 2% of the amount given, whichever is less (no FMV would be listed on the receipt in this case).
    • Overall, for non-token benefits, there is no minimum gift amount needed and the FMV is noted on receipts and not considered part of the tax deductible contribution to the charity. In other words, any item can be benefited out of a receipt. (This is where my mind is going, but really? Any item?)
    • Insubstantial benefits, which are branded but of extremely low value (so, less than a token benefit), include items like mailing labels and greeting cards, provided donors have not ordered the items and the items are of insubstantial value. These do not need to be called out on receipts.

    Have I covered all the bases? Ideally, we'll have a policy to refer back to if/when I'm asked about sending mugs, tshirts, and totebags.

    Thanks,

    Elizabeth



    ------------------------------
    Elizabeth Tavares
    Director, Donor Revenue Management & Records
    UNICEF USA
    ------------------------------

    Original Message


  • 9.  RE: Token stickers, mailing costs, and size of gift

    Posted 06-02-2026 10:53 AM
    • There is not a one to one relationship between the item and the gift; if a donor makes a $70 gift in June and receives a $10 mug, they cannot make an $80 gift in September and receive the $5 socks. They are limited in their benefits received in a single calendar year; they cannot receive token items totaling more than $13.90 just because they gave additional gifts.
    Not exactly. It depends on what giving level earns what benefit. In your example, if the required gift amount to receive both benefits is $150, there is essentially a one-to-one relationship.

    However, the IRS never says anything about a "calendar year." It's quite common with recurring donations (monthly credit card payments) that a benefit is earned over the course of multiple years.
    • Overall, for non-token benefits, there is no minimum gift amount needed and the FMV is noted on receipts and not considered part of the tax deductible contribution to the charity. In other words, any item can be benefited out of a receipt. (This is where my mind is going, but really? Any item?)
    You can provide any benefit for any gift amount. Although most organizations prefer to keep the benefit values below the amount paid, else there is no net gift and no IRS receipt. When these benefits are provided, per IRS Publication 1771 the receipt must reflect the total amount paid, the value and a description of each benefit provided, and a statement indicating that the deduction is limited to the difference between the two.
    • Insubstantial benefits, which are branded but of extremely low value (so, less than a token benefit), include items like mailing labels and greeting cards, provided donors have not ordered the items and the items are of insubstantial value. These do not need to be called out on receipts.
    These are the token benefits described at the beginning of your email - Token=insubstantial. To avoid having to report them on the receipt the combined value must be under $13.90 and can only be given for gifts of $69.50. If you decide you want to provide any of these benefits for gifts of under $69.50, they must be treated as QPQ on the receipt unless the fair market value is less than 2% of the amount given.

    For example, for a donation of $50 the maximum value of any benefit given cannot exceed $1 - 2% of $50.

    John


    John H. Taylor, Principal
    John H. Taylor Consulting, LLC
    2604 Sevier Street
    Durham, NC     27705

    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987





    Original Message


  • 10.  RE: Token stickers, mailing costs, and size of gift

    Posted 06-02-2026 12:03 PM
    The token exception is, first off, an exception to the rule that you have to enumerate the benefits provided in a mixed transaction, and stat the FMV. There are two separate conditions to qualify for the exceptions, and you gift to the donor may qualify under either or both.

    1 - FMV of the token is less than the lesser of 2% or $139 (logo is irrelevant)
    2 - The donation is $69.50+, the token is name- or logo-bearing and the cost of the items in aggregate is less than $13.90

    In other words, the IRS is saying that if the token has your name/logo on it, it's ok if it's worth more than 2%. As per John, you can give greater benefits than these ratios provide. Those benefits would have to be enumerated with an FMV, but this is perfectly normal - consider Gala tickets and the cost of dinner as a common example. 

    The low-cost articles exception from Pub 1171 does not state a precise valuation, but the key is that it's given out regardledss of being ordered, it's not a premium premised on a specific contribution account. Another not-so-well-known thing is that the above rules are all 'safe harbor' rules, and that according to Revenue Procedure 90-12, whether benefits are insubstantial is determined on the facts. More valuable items might still be considered insubstantial, depending on those facts and circumstances.


    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:





    Original Message


  • 11.  RE: Token stickers, mailing costs, and size of gift

    Posted 05-27-2026 10:56 AM
    For the first time, we are considering a change to who does/does not receive our alumni magazine.  Moving forward, we envision mailing to:
    1.  Current parents
    2. Alumni and friends we want to work to engage/continue to engage-including current donors.  

    We believe the magazine cost to print and mail is roughly $3.00 per issue. That print portion of that number will fluctuate based on total count printed.  Of course this does not include content development.  The magazine will, of course, be online for free. 

    Here is my two part question: 
    PART ONE: Given that the audience is not exclusively donors, and that the entire alumni population will have access to the same content (more actually) on line, is there a quid here?  I am not convinced that there is...

    PART TWO: Without crossing a line, how do we let people know that the most likely/most effective means to ensure a place on the mailing list is by  making a gift (amount to be determined).

    Following this discussion closely, as the flowchart that I see in my mind currently looks like spaghetti! And while I know we can no longer afford to send the magazine to everyone, I anticipate a lot of frustrated $100 donors if we have to deduct the FMV from each of their gifts.  

    Tracy Rush

    Executive Director, Philanthropy Services

    Otterbein University | Division of Philanthropy and Alumni Engagement

    1 South Grove

    Westerville, OH 43081

    Office: 614,823.1290 | Cell:614.738.2870

     

    Your support of Otterbein today can make a difference in the lives of our students!

     






    Original Message


  • 12.  RE: Token stickers, mailing costs, and size of gift

    Posted 05-27-2026 11:04 AM
    Decades ago, Counsel at Duke ruled that our Alumni Magazine (paper version) was not a quid pro quo. Granted, any graduate who made a gift was automatically added to the mailing list. However, as long as we included "prominent" language indicating that no gift was required - following the way NPR runs its contests - we demonstrated that there wasn't a QPQ.

    You will need to ask Counsel what they think, especially regarding the prominent reference to being added to the mailing list. I recall an older IRS ruling (which I am not going to look up) that specifically ruled out any "fine print."

    John

    John H. Taylor, Principal
    John H. Taylor Consulting, LLC
    2604 Sevier Street
    Durham, NC     27705

    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987





    Original Message


Related Content