Tax deduction for charitable gifts

Giving away money and things to a charity might make you feel good but don’t forget about the tax advantages as well. Charitable contributions are simply another method you can reduce your taxes. Prior to taking a charitable contribution write-off, don’t forget that there are certain rules that you need to follow.

Make sure the charity you contribute to is a certified tax-exempt organization. Churches and other religious organizations don’t need to file for tax-exempt standing from the IRS. However, other charitable organizations must have their 501 (c) (3) status established before your donations are tax deductible. So make sure the organization that you are donating is tax exempt if you want to use it as a tax write off. If you are unsure, you can check IRS Publication number 78 for more information.

Keep detail records. Always ask for a receipt for your donation whether it’s money or an estimated worth of given products. If you write a check, keep a copy of the the canceled check. If you give property, like a car, make sure to obtain a notice of acknowledgment specifying the value of your donation.

Any time you make a donation, make a note of the name of the charity, the date of your contribution as well as the amount or value.

Know contribution restrictions so that you don’t get in trouble with the IRS.  In general, the following regulations apply:

  • Money contributions are deductible in full up to 50 % of your adjusted gross income.
  • Property contributions are insurance deductible in full up to 30 % of your adjusted gross earnings.
  • Appreciated resources increase property, such as stocks, precious jewelry or real property, are insurance deductible in full up to 20 % of your adjusted gross earnings.

 

Be careful, though. Some charities slip under the 30 % or 20 % restriction even if you are giving cash. The charity ought to have the ability to inform you which classification they fall under. If they just can’t, check the Limits on Deductions area of IRS Publication 526, Charitable Contributions, to see which group they slip under. Fortunately is if you surpass the adjusted gross income limitations one year, you can carryover the write-off to the each of the next 5 levy years till the deduction is consumed.

Understand what is not deductible. Contributions to certain organizations are not tax deductible. These organizations include:

  • Political parties, campaigns, or activity boards.
  • Charges or dues paid to professional affiliations, labor unions, or company leagues.
  • Contributions to the property owner’s organizations or country clubs.
  • Contributions to for-profit academics or medical centers.
  • The worth of your time or earnings lost due to time contributed to a non-profit.

 

When you’ve determined what you can deduct and have all your documents in the order, you have to understand the best ways to file the write-off. A number of forms might be included, depending on the worth of your contribution. To begin with, you should be able to itemize your write-offs. If you are taking the typical write-off on your taxes, you won’t be able to claim the Charitable Contribution Abatement.

Sponsorships that Non-Profit Organization Should Avoid

Non-profit organizations need all the funds that they can get. But does this mean that they should adapt a beggar mindset. That is, to not be choosy about the support that they are receiving. What leaders of non-profit organizations should realize is that getting the wrong kind of sponsors can cost them more in the long run. They should keep in mind that when companies agree on a sponsorship deal, most of them expect to get a return on their investment. That’s the harsh truth. They could be getting more from the partnership than what is stipulated in the contract.

Below are some of examples of sponsors that non-profit organizations should avoid.

Sponsorships that will send the wrong signals to people. Accepting money from some sponsors may put your organization in a bad light. In general, you should avoid companies with objectives that seem to run counter with yours. The impression that you must avoid is that you are taking money for money’s sake. If you are a group working to save the environment, for example, then you should avoid companies with questionable practices when it comes to environmental protection. You should avoid this dubious sponsorships not only to protect your image but also to send a good message to other companies that would like to support you. Your actions must be completely consistent with the thrust of your organization.

Sponsorships from companies that are not relevant. Ultimately, you should look for sponsors that will give you more than just money. You should look for companies that can help you achieve your goals. This is the reason why you should get sponsors that are relevant to your mission. Money is much easier to find than a partner who will provide support for a long time. Always think long-term when getting into sponsorship deals. A sponsors may be able to fund your operations for a month but what will happen in the months after that? If you see your organization and a potential sponsor still working together after five years, then that is the type of company that you should make as a partner.

Sponsorships that will cause issues. The last thing that a non-profit organization needs is controversy because such can affect how the organization relates to its members and stakeholders. This is why these organizations should avoid associating themselves with companies that are controversial. Being associated with the wrong group can hurt an organization in more ways than one. And no amount of money will ever worth doing so. For one, a negative image can offend your existing supporters which can then lead to withdrawal of support. You organization can also be seen as a fake, something that exist only to serve the personal interests of its members. Better to sacrifice one big fish, in order to continue getting little ones for a long time.

You are not a beggar Keep that in mind. You can actually choose which company to take as sponsor. You must be concerned more with getting the right kind of sponsor than in not getting any kind of support.

Non Profit Defined

Non-profit organizations are those covered under the United States Internal Revenue Code 26 USC Section 501(c).  What this means is that those entities that qualify for non profit status under 501(c) are tax exempt nonprofit organizations under the tax code.

Most people are familiar with the 501(c)(3) which cover Religious, Educational, Charitable, Scientific, Literary, Testing for Public Safety, to Foster National or International Amateur Sports Competition, or Prevention of Cruelty to Children or Animals Organizations but there are actually 28 types of non profit organization as defined by the statute that grants tax exempt status.  They range from credit unions, chambers of commerce, employee pension funds, civil leagues, to fraternities and organizations for the armed forces.

Here is a full list of the type of non profit entities under 501(c)(3):

501(c)(1) — Corporations Organized Under Act of Congress
501(c)(2) — Title Holding Corporation for Exempt Organization
501(c)(3) — Religious, Educational, Charitable, Scientific, Literary, Testing for Public Safety, to Foster National or International Amateur Sports Competition, or Prevention of Cruelty to Children or Animals Organizations
501(c)(4) — Civic Leagues, Social Welfare Organizations, and Local Associations of Employees
501(c)(5) — Labor, Agricultural, and Horticultural Organizations
501(c)(6) — Business Leagues, Chambers of Commerce, Real Estate Boards, etc.
501(c)(7) — Social and Recreational Clubs
501(c)(8) — Fraternal Beneficiary Societies and Associations
501(c)(9) — Voluntary Employee Beneficiary Associations
501(c)(10) — Domestic Fraternal Societies and Associations
501(c)(11) — Teachers’ Retirement Fund Associations
501(c)(12) — Benevolent Life Insurance Associations, Mutual Ditch or Irrigation Companies, Mutual or Cooperative Telephone Companies, etc.
501(c)(13) — Cemetery Companies
501(c)(14) — State-Chartered Credit Unions, Mutual Reserve Funds
501(c)(15) — Mutual Insurance Companies or Associations
501(c)(16) — Cooperative Organizations to Finance Crop Operations
501(c)(17) — Supplemental Unemployment Benefit Trusts
501(c)(18) — Employee Funded Pension Trust
501(c)(21) — Black lung Benefit Trusts
501(c)(22) — Withdrawal Liability Payment Fund
501(c)(23) — Veterans Organization
501(c)(25) — Title Holding Corporations or Trusts with Multiple Parents
501(c)(26) — State Sponsored Organization Providing Health Coverage for High-Risk Individuals
501(c)(27) — State Sponsored Workers’ Compensation Reinsurance Organization
501(c)(28) — National Railroad Retirement Investment Trust
501(c)(29) — Qualified Nonprofit Health Insurance Issuers

Hello Everyone!

Welcome to nonprofit sponsorship!  A portal for nonprofit organization to use to find potential sponsors for their charitable causes.  Whether it is to help animals or humans, we are here to help you find the right sponsors for your organizations.