Charitable contributions are the lifeblood of most non-governmental organizations (NGOs) and public charities. To encourage donations, tax laws allow donors to deduct contributions on their income tax returns. As an NGO administrator, understanding these rules helps you educate donors and structure giving campaigns strategically.
Cash vs. Non-Cash Donations
While cash is the most common form of donation, donors of highly appreciated assets (like stock or real estate) receive a double tax benefit: they deduct the full fair market value and avoid paying capital gains tax. NGOs must set up brokerage accounts to accept these assets directly.
Compliance and Donor Substantiation
NGOs are legally required to provide written acknowledgments for donations of $250 or more. For non-cash donations exceeding $5,000, donors must obtain a qualified appraisal and have the NGO sign IRS Form 8283.
Keeping donor disclosures accurate and providing clear, tax-compliant documentation builds trust and ensures your donors remain eligible for deductions.