Philanthropy and the IRS Charitable Deduction

From Plato to your tax return!


The National Philanthropic Trust (, in its analysis of “The History of Giving”, identifies 347 BCE as the date of one of the earliest known acts of philanthropy, when Plato, in his will, left his farm to a nephew, with instructions that the proceeds be used to support students and faculty at the academy he founded.

Giving continues:  in our own time, the Trust believes that in 2011, Americans gave $298.3 billion to charities, a 3.9% increase from 2010.  By any measure this is a great deal of money, and a wonderful thing.  And of course, much of it will have been tax deductible.

To achieve a tax deduction for a contribution to charity, you must follow certain rules set forth in the Internal Revenue Code, and interpretations of it by the Internal Revenue Service.  In a recent release, the IRS set out “Nine Tips on Deducting Charitable Contributions,” all of which are basic and for the most part are of long standing, but we think it’s worth your time to review them.

1. If you want a tax deduction, you must donate to a qualified charitable organization. You cannot deduct contributions you make either to an individual, a political organization or a political candidate.

2. You must file Form 1040 and itemize your deductions on Schedule A. If your total deduction for all noncash contributions for the year is more than $500, you must also file Form 8283, Noncash Charitable Contributions, with your tax return.

3. If you receive a benefit of some kind in return for your contribution, you can only deduct the amount that exceeds the fair market value of the benefit you received. Examples of benefits you may receive in return for your contribution include merchandise, tickets to an event or other goods and services.

4. Donations of stock or other non-cash property are usually valued at fair market value. Used clothing and household items generally must be in good condition to be deductible. Special rules apply to vehicle donations.

5. Fair market value is generally the price at which someone can sell the property.

6. You must have a written record about your donation in order to deduct any cash gift, regardless of the amount. Cash contributions include those made by check or other monetary methods. That written record can be a written statement from the organization, a bank record or a payroll deduction record that substantiates your donation. That documentation should include the name of the organization, the date and amount of the contribution. A telephone bill meets this requirement for text donations if it shows this same information.

7. To claim a deduction for gifts of cash or property worth $250 or more, you must have a written statement from the qualified organization. The statement must show the amount of the cash or a description of any property given. It must also state whether the organization provided any goods or services in exchange for the gift.

8. You may use the same document to meet the requirement for a written statement for cash gifts and the requirement for a written acknowledgement for contributions of $250 or more.

9. If you donate one item or a group of similar items that are valued at more than $5,000, you must also complete Section B of Form 8283. This section generally requires an appraisal by a qualified appraiser.

Giving to others may take many forms, but it is helpful to keep in mind that in order to get a tax benefit for the gift, you must meet these rules, which relate to normal cash contributions—if you want to discuss these, or other opportunities involving more complicated arrangements, such as charitable trusts, we are here to help.