Substantiation and Disclosure Requirements

IRS Publication 1771, Charitable Contributions – Substantiation and Disclosure Requirements, explains the federal tax law for charities (like PTAs) that receive tax-deductible contributions. Some of that information is summarized here; the publication in its entirety can be downloaded from the IRS website

There are two general rules to meet the substantiation and disclosure requirements:

1. A donor must obtain a written acknowledgment for any single contribution of $250 or more to claim it on his or her federal income tax return. Further, as of January 1, 2007, no charitable contribution can be claimed unless the donor has either a bank record (such as a canceled check) or a written communication from the charity (such as a receipt or a letter) to support the contribution.
   1. Rule 1: Applies to any contribution received by the PTA. Although it is the donor’s responsibility to obtain a written acknowledgment, the PTA can assist a donor—and hopefully encourage continued donations—by providing a timely, written statement containing the following information: Œ
      1. Name of PTA Œ
      2. Amount of cash contribution or description (but not the value) of non-cash contribution Œ
      3. Statement that no goods or services were provided in return for the contribution, or a description and good faith estimate of the value of good or services that were provided. 
   2.  While donors may not expect PTAs to provide a written acknowledgment for small, cash donations given for an event like a jog-a-thon, the PTA should be prepared to issue such a receipt if it is requested. Insubstantial goods or services provided in exchange for a contribution do not have to be described in the acknowledgment. Examples might include a school calendar magnet or student directory with the PTA’s logo. It is not necessary to include the donor’s social security number or tax identification number on the acknowledgment.
      1. Examples of wording for written acknowledgments is as follows:
         1. “Thank you for your cash contribution of $300 to Exemplary PTA, received by us on December 12, 20__. No goods or services were provided in exchange for your contribution.”
         2. “Thank you for your donation of twelve dozen muffins to Exemplary PTA for our Moms & Muffins literacy program on April 2, 20__. No goods or services were provided in exchange for your contribution.”
2. A charitable organization must provide a written disclosure to a donor who makes a payment in excess of $75 partly as a contribution and partly for goods and services provided by the organization. 
   1. Rule 2: Applies to PTA activities like silent auctions. In such cases, a donor may only take a contribution deduction to the extent that the contribution exceeds the fair market value of the good or services the donor receives. The required written disclosure statement must do the following: Œ
      1. Inform the donor that the amount of contribution that is deductible for federal income tax purpose is limited to the excess of the contribution over the value of the goods or service provided Œ
      2. Provide the donor with a good faith estimate of the fair market value of the goods or services
   2. The disclosure must be in writing, and a penalty is imposed on charities that do not meet the written disclosure requirement.