Quid Pro Quo
Quid pro quo contributions can complicate tax reporting for both donors and charities. Quid pro quo donations occur when a donor makes a contribution to a charity and, in return, receives goods or services. The value of the goods or services provided reduces the portion of the donation that is tax-deductible.
What are quid pro quo gifts? A quid pro quo gift is when the donor's payment is part donation and part purchase. For example, if a donor pays $100 for a pancake supper ticket valued at $20, then $80 of that payment is considered a tax-deductible charitable contribution.
Implications for Contribution Statements
- The organization must provide a written disclosure statement.
- The statement must inform the donor that only the portion of the contribution exceeding the value of goods or services is tax-deductible.
- Include a good-faith estimate of the value of the goods or services provided.
Example Language
A church might choose to send letters. For example, "Thank you for your contribution of $150 to Beavercreek Church. In exchange for your contribution, we provided goods and services with an estimated value of $50. Therefore, $100 may be tax-deductible."