In-Kind Contributions: Donor ResponsibilitiesPosted on April 2nd, 2018
Has your nonprofit received an in-kind donation of goods? This is great for your organization, but let’s make sure you are providing your donor with the support they need to properly report it on their personal tax returns.
The standards for documentation vary depending on the amount and/or size of the donation. If your donor wants to claim the donation of this item as a deduction on his or her personal returns, then he or she needs to have a written receipt from your organization to substantiate the deduction.
When you are preparing and sending the acknowledgement letter, remember that the responsibility of determining the value of the donated property lies with the donor. Your responsibility is to write the donor an acknowledgement letter that describes the donated equipment but does NOT assign a value to the equipment.
For donations valued at $5,000 or more, the donated item needs to be appraised to determine its fair market value. (Again, this is the donor’s responsibility and NOT that of the nonprofit organization receiving the donation. However, if the donor informs you that the donated item is worth $5,000 or more, it is your organization’s responsibility to request documentation verifying the item’s value.)
The valuation should be done by an independent appraiser who should provide a written report. The donor should then send you a copy of this report and a completed IRS Form 8283 for your organization to sign and keep a copy of. Your donor can attach this form to his or her 1040 when filing it the following year.
If you have any questions about this process, please feel free to contact us—we’d be happy to talk you through it.