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Determining the Proper Date to Recognize Donations

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Determining the proper date to report on a donor receipt can be difficult. Ordinarily, a contribution is considered “made” at the time when delivery occurs. This is the time when a donor gives up control of the funds and gives the charity the ability to access them.

For a donor who mails a check to a charity that properly clears the bank in due course, the contribution date is the postmark date on the transmittal envelope. The postmark date of the donation becomes critical around the beginning and end of a calendar year. A charity may receive a check with a December date but a postmark date of January. Although the donor may have intended for the contribution to qualify for a deduction in the preceding tax year, the donation qualifies for the tax year beginning in January instead, due to the postmark date.

Before issuing a donor receipt, the charity should call the donor and explain the rule and the reason why they must use the date on the envelope on the donor receipt. Many donor relation problems can be solved before they arise with good personal communication.

For credit card donations, the date of the contribution is the date on which the charge has been made, not the date on which the donor actually pays the credit card bill.

This is the second of a three-part series on handling donations. In the final article in the series we will address written disclosure requirements for donations where a donor receives a benefit, often referred to as “quid pro quo”, in exchange for a contribution. One of the most common occurrences of quid pro quo donations is at fundraising events. Failure to provide adequate disclosure can result in IRS penalties as well as donor relation penalties. The article will cover the situations where this disclosure is required as well as exceptions to the rule.

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