New Donor Tax Receipt Letter Report Feature: In-Kind Contributions List
When we designed the donor tax receipt letter over a year ago, we wanted to align as closely as possible with government regulations in the United States and Canada. The actual text of the letter is left up to each institution that is using our tax receipt letters to ensure the letter meets all local, state, and federal requirements (e.g., by adding language about goods and services if any were provided in exchange for donations). According to current regulations, the responsibility falls on the institution receiving the donations to report cash (or cash equivalent) amounts made during the tax year to donors. To that extent, on our end we wanted to be sure to list the tax-deductible portion of cash donations accurately so that you may provide your donors a list of all payments made toward donations for tax-filing purposes. All donations paid in full during the year and any payments toward a pledge completed during the calendar year are listed on the tax letter. We also added the ability to include "Value-Received" amounts for donations so that if any good or services were received by the donor in exchange for their contribution, that value would also be listed on the letter as well and a final tax-deductible amount (the total donation value minus any value received) would be displayed for donors. This process with cash (or cash equivalent) donations is fairly standard and should meet all regulations.
In-Kind contributions, on the other hand, are not as straightforward. In some jurisdictions, in-kind donations (or a significant portion of the contribution) cannot be claimed as a tax deduction, particularly those involving services as opposed to goods donated. Moreover, in many jurisdictions, unlike cash (or cash equivalent) donations, it is not the responsibility of the institution receiving the in-kind contribution to provide a tax-deductible value for them. In such jurisdictions, that responsibility falls on the donors themselves to determine. For these reasons, we had not felt compelled to include a listing of in-kind contributions on tax receipt letters; instead we provided the ability to generate Thank You letters to send acknowledgements to donors upon receipt of the in-kind donation by your institution. This served as sufficient information for the donor's own records so they could then handle the responsibility of tracking and reporting whatever portion they determined of their own accord was needed for tax purposes.
Over the last year, we received several requests from BigSIS schools for an option to list a summary of these in-kind contributions on the annual tax receipt letters despite the concerns listed above. As a result, we have added this option to tax receipt letters. It is very important, however, if the above concerns apply to you in your state or province, to make clear to donors that the determination of the value of these contributions is their responsibility and that their listing on the tax receipt letter is for recognition purposes only. With that said, we are excited to announce the ability to now list in-kind contributions made during the calendar year on your annual donor tax receipt letters!