Just how important are those end of year donor letters and statements that charitable organizations send? Very important, according to the IRS.
In a recent case, courts disallowed a charitable contribution deduction for a donor because of a defective donor letter sent to them. What would classify a donor letter as “defective” you ask? In this particular case there were problems with two of the requirements:
1. The charitable organization must provide a contemporaneous written acknowledgement of the contribution for the donor.
2. The charitable organization must state in the written acknowledgement whether any goods and services were provided in exchange for the contribution.
Basically, the organization must provide a written statement of what was given to them in a timely manner, meaning some time before the due date of the donor’s current year tax return, and they must state whether any goods or services were provided to the donor. There are also other requirements, but those two can be easily overlooked and cause headaches for the donor.