Non-Cash Donation

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ngaham
Posts: 193
Joined: Wed Mar 15, 2017 10:25 am

Non-Cash Donation

Post by ngaham »

Hi,
We had a guy in our church purchase a new sound board for us with his own money. How should I go about giving him credit for this donation? Is it just a letter for the donation of the item? He didn't give the money to the church first, he went and purchased the item on his own with his own money.

NeilZ
Posts: 10209
Joined: Wed Oct 08, 2003 1:20 am
Location: Dexter NM
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Re: Non-Cash Donation

Post by NeilZ »

ngaham wrote:Hi,
We had a guy in our church purchase a new sound board for us with his own money. How should I go about giving him credit for this donation? Is it just a letter for the donation of the item? He didn't give the money to the church first, he went and purchased the item on his own with his own money.
We just give a letter on church letterhead, thanking the donor for the item. We list the item, the price the donor paid, and the date donated.

We try to discourage this type of donation, as we would rather have the donation show up as part of the contributions statement, and we often can get the same item at a bit of a discount along with no sales tax.

UPDATE: please note my advice about listing the price paid on the written receipt was incorrect, IRS guidance on this is clear. You must list the name and address of the organization (which is satisfied by using letterhead stationary), the date of the donation, and a description of the donated item. DO NOT list the value, as that is something the donor must assign based on IRS Pub 526
Neil Zampella

Using PC+ since 1999.

ngaham
Posts: 193
Joined: Wed Mar 15, 2017 10:25 am

Re: Non-Cash Donation

Post by ngaham »

NeilZ wrote:
ngaham wrote:Hi,
We had a guy in our church purchase a new sound board for us with his own money. How should I go about giving him credit for this donation? Is it just a letter for the donation of the item? He didn't give the money to the church first, he went and purchased the item on his own with his own money.
We just give a letter on church letterhead, thanking the donor for the item. We list the item, the price the donor paid, and the date donated.

We try to discourage this type of donation, as we would rather have the donation show up as part of the contributions statement, and we often can get the same item at a bit of a discount along with no sales tax.
Yeah, I can understand that. I guess what they did was they sold the item to the church, but he swiped his card. So, on the invoice from Sweetwater it is billed to our church, he just paid for it. So he actually got the tax exempt.

NeilZ
Posts: 10209
Joined: Wed Oct 08, 2003 1:20 am
Location: Dexter NM
Contact:

Re: Non-Cash Donation

Post by NeilZ »

ngaham wrote:
NeilZ wrote:
ngaham wrote:Hi,
We had a guy in our church purchase a new sound board for us with his own money. How should I go about giving him credit for this donation? Is it just a letter for the donation of the item? He didn't give the money to the church first, he went and purchased the item on his own with his own money.
We just give a letter on church letterhead, thanking the donor for the item. We list the item, the price the donor paid, and the date donated.

We try to discourage this type of donation, as we would rather have the donation show up as part of the contributions statement, and we often can get the same item at a bit of a discount along with no sales tax.
Yeah, I can understand that. I guess what they did was they sold the item to the church, but he swiped his card. So, on the invoice from Sweetwater it is billed to our church, he just paid for it. So he actually got the tax exempt.
OK .. that works :)
Neil Zampella

Using PC+ since 1999.

ngaham
Posts: 193
Joined: Wed Mar 15, 2017 10:25 am

Re: Non-Cash Donation

Post by ngaham »

I'll type up the letter for him. Thanks for all of your help Neil. Your help has been invaluable to me and, even though they don't know it, our church. You have a good ministry on here helping churches like ours. Our church wouldn't be to the place we are today had it not been for your guidance and help throughout this process. Thank you!

NeilZ
Posts: 10209
Joined: Wed Oct 08, 2003 1:20 am
Location: Dexter NM
Contact:

Re: Non-Cash Donation

Post by NeilZ »

ngaham wrote:I'll type up the letter for him. Thanks for all of your help Neil. Your help has been invaluable to me and, even though they don't know it, our church. You have a good ministry on here helping churches like ours. Our church wouldn't be to the place we are today had it not been for your guidance and help throughout this process. Thank you!
Glad to have been of some assistance. :)
Neil Zampella

Using PC+ since 1999.

bjccompton
Posts: 2
Joined: Fri Sep 09, 2011 2:20 pm

Re: Non-Cash Donation

Post by bjccompton »

Hi
I'm new to the forum and not sure of protocol here, but here goes. I have been using Power Church for about 6 years and I love it.
On Non-Cash contributions, in our list of contribution funds there is fund # 99 "Non-Cash contributions". It has no accounting info (debit/credit) and therefore never enters over to fund accounting so all accounts balance since no actual money is involved. It only shows up in contributions. I don't know who/how it was originally set up because it has been there since I have been doing the bookkeeping here and I have never been able to find anything in the manual.
Example: Joe Smith bought Sunday School supplies and paid for them himself. He gives me the receipt and I enter the date of the purchase and the amount under Contribution fund # 99, and memo what it was for. When I run a contribution statement for him and include memos it shows on his contribution statement along with all other monetary contributions.
I've always wondered if this was totally correct but it has worked with no problems. I am always open to someone telling me if I'm doing something wrong. Hope this might be helpful.
bjcmustnaz

NeilZ
Posts: 10209
Joined: Wed Oct 08, 2003 1:20 am
Location: Dexter NM
Contact:

Re: Non-Cash Donation

Post by NeilZ »

bjccompton wrote:Hi
I'm new to the forum and not sure of protocol here, but here goes. I have been using Power Church for about 6 years and I love it.
On Non-Cash contributions, in our list of contribution funds there is fund # 99 "Non-Cash contributions". It has no accounting info (debit/credit) and therefore never enters over to fund accounting so all accounts balance since no actual money is involved. It only shows up in contributions. I don't know who/how it was originally set up because it has been there since I have been doing the bookkeeping here and I have never been able to find anything in the manual.
Example: Joe Smith bought Sunday School supplies and paid for them himself. He gives me the receipt and I enter the date of the purchase and the amount under Contribution fund # 99, and memo what it was for. When I run a contribution statement for him and include memos it shows on his contribution statement along with all other monetary contributions.
I've always wondered if this was totally correct but it has worked with no problems. I am always open to someone telling me if I'm doing something wrong. Hope this might be helpful.
bjcmustnaz
At one time that 'amount' was all you needed to give for a 'non-cash' donation, however, the IRS in its Publication 1828, Tax Guide for Churches and Religious Organizations, on page 29, it states the information a church can give a donor :
Although it’s a donor’s responsibility to obtain a written acknowledgment, a church or religious
organization can assist the donor by providing a timely, written statement containing:
  • name of the church or religious organization,
    date of the contribution,amount of any cash contribution, and
    description (but not the value) of non-cash contributions
You can add the description of the item as a memo, but note you are not supposed to give the value of the item given, and Powerchurch will not accept a 0.00 as a contribution.

Then you have IRS Pub 526, Charitable Contributions which tells the donor this:
If you make any noncash contribution, you must get and keep a receipt from the charitable or­ganization showing:
1. The name of the charitable organization,
2. The date and location of the charitable contribution, and
3. A reasonably detailed description of the property.

A letter or other written communication from the charitable organization acknowledging receipt of the contribution and containing the informa­tion in (1), (2), and (3) will serve as a receipt.
So that definitely states that you should not be showing any value of an item donated.

So my advice previously in the thread to show the value of the item on the letter to the donor was incorrect. I should know better as I read this publication every other month or so.
Neil Zampella

Using PC+ since 1999.

bjccompton
Posts: 2
Joined: Fri Sep 09, 2011 2:20 pm

Re: Non-Cash Donation

Post by bjccompton »

Thanks for the information and references. There have only been a very few times this has come up and not lately, but now I have it on good authority why we cannot do it. They will only get letters from now on.
I am so thankful for all the information I get here.

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