Some Facts about Charitable Contributions

I volunteer my time with a local non-profit theater company, serving as an usher for theatrical productions. I was working my shift one night, when I heard, out in the lobby, another volunteer hawking raffle tickets. “Only $5 each, and your purchase is tax deductible.”

If I hadn’t been working, I would have gone over to the raffle table and pointed out to this helpful volunteer that no, raffle tickets are not a tax-deductible expense to the person who is buying it. Even though the proceeds go to the organization, the IRS is very specific that raffles, even when purchased from a not-for-profit organization, are not a tax-deductible item.

And while my time is very valuable, to me at least, I cannot deduct the value of my time when I volunteer to help out a non-profit. Nobody can.

Have you ever gone to a benefit for a local person who has fallen on hard times, a family with a sick child, a kid who is raising money to attend school somewhere, or any fundraiser where the money is earmarked for a specific person or persons? That’s not tax-deductible either.

And while the Trumansburg Rotary Club is an organization that is exempt from paying taxes, it is not a 501(c)3 charitable organization, and therefore money contributed to the Club itself is not tax-deductible. (However, dues to service organizations can be deducted as a business expense, and Rotary International does have a not-for-profit arm, called the Rotary Foundation, to which tax-deductible contributions can be made.)

What about contributions to lobbying groups? Sorry, not tax-deductible. This includes the American Civil Liberties Union, for an example. However, the ACLU has set up a foundation to which contributions are tax-deductible. So you need to pay attention to exactly who is getting your dollar.

Contributions to political candidates? Nada. The Democratic Senatorial Campaign Committee? Nope. Sarah Palin’s political action committee? Sorry, not deductible. If you have questions, go to the organization’s website. It should tell you whether or not a donation is tax-deductible. The IRS also has a very helpful website where you can search to see if the organization to which you are giving is tax-deductible:

The IRS states that not-for profit organizations, 501(c)3 organizations, should issue receipts for donations, and clearly state on the receipt what amount of the donation is tax-deductible. For instance, if membership in a not-for-profit includes a subscription to a magazine, then the fair market value of that magazine must be deducted off the donation to arrive at the portion of the donation that is tax-deductible. However, my experience is that some organizations, especially small ones, do not know about this rule. Every year, I get a very nice handwritten note from the director of an organization to which I contribute, but she doesn’t mention the amount of money donated. She should. If I were to be audited by the IRS, they wouldn’t necessarily just take my word that I contributed what I said I contributed. They like to see backup documentation.

Finally, be aware that charitable contributions are really only deductible by those who itemize deductions. If you’re one of the many people who don’t either have a very high income (paying big state taxes), pay property taxes or a mortgage, chances are small that you’ll be itemizing deductions.

Which is not to say that charity is not worthwhile. That raffle ticket you buy, that kid with cancer whose spaghetti dinner you attend, that soccer team who is raising money for a trip to Europe, that donation to the organization whose beliefs are in line with your own — they’ll be quite pleased that you helped them out. But the IRS won’t recognize the value of that generosity by granting you a tax-deduction.