PTO Today

Here is the defintion of Quid Pro Quo Contribution:

Quid pro quo—A quid pro quo contribution is a payment made to a charity by a donor partly as a contribution and partly for goods or services provided to the donor by the charity. For example, if a donor gives a charity $100 and receives a concert ticket valued at $40, the donor has made a quid pro quo contribution. In this example, the charitable contribution portion of the payment is $60.

My question is: It we have a silent auction and a person purchases a basket for $100, they technically are not "donating", are they? But because they are writing a check to the PTO, they could call it a donation, so we should issue these receipts disclosing that they did not pay more than the value and thus it is not tax deductible? But really it isn't partly a donation and partly for the basket. It is all for the basket.

Any thoughts or advice?

Per your description, the only portion of the payment that the parent could claim as a charitable contribution is the amount over and above the value of the basket.

A standard receipt showing that the buyer did not pay more than the value of the basket will only be accurate if that is the case. If a buyer generously gives more than the basket's actual value, the buyer may expect to have the option to claim the difference on their taxes as a charitable deduction and won't be pleased with the receipt wording in that circumstance.

We don't issue receipts for these situations, partly because of this nuisance/issue.

Does anyone here actually issue receipts for IRS purposes?

If you are 501c(3) organization, you must follow the Quid Pro Quo contribution rules which applies to payments over $75 for goods and services. I don't think the IRS would think too kindly on ignoring their rules because of it being a nuisance. However, it you are not a 501c(3) organization, the donations cannot be tax deducted anyway.

Sorry for the confusion...in my example, I meant only when they don't pay more than the value.

What we have been doing is issuing letters that state the value and how much they paid. Obviously, if there payment is more than the value, they get a tax deductible contribution. If they pay less, they do not get to deduct, but you have to disclose this to them. If they were audited and the IRS found that you had not done your due diligence in disclosing all of this, then the IRS can fine you.

According to the IRS website, you can disclose the value of the item in an "auction package". I just wonder if this is enough. We have been doing more but I would really like to simplify it.

The IRS does *not* require me to issue receipts; it's a nuisance, so I don't do it. (My donors might want it, and if enough of them complained and/or stopped donating, I might have to do it -- or we'd have to create a new officer position, assistant treasurer for IRS receipts.)

If I were to issue receipts, then I would need to follow the QPQ rules.

I think there are 2 separate issues being discussed here. It looks like it started asking about receipts for people who purchase an item at a silent auction. Then, further down the thread, there is talk about receipts for donors who donate items to auctions. We do not issue receipts for buyers, but we do, upon request of the donor, issue them for donations (usually to businesses). We have discussed issuing receipts to families who donate items of a value that can be determined (i.e. a gift card or specific item) and will probably start that with this year's auction.

I don't think I was much of a help with the original question, but I just wanted to try to clear up any potential confusion in the discussion.

For the auction situation, it's correct that if they pay more than face value of the item, the difference could be claimed as a donation. As for issuing receipts for that - I think it depends on the nature of your auction.

If its the type where lots of people routinely pay exorbitant amounts for items because "it's for charity", then yes, you should probably continue what was already mentioned, just have a generic receipt where you can write in the item, value, and amount paid. So if someone buys a $40 gift certificate for $75, they can claim the $35. You could event adapt the bid form to serve dual purpose.

But if value is difficult to determine or it's fairly rare that people pay more than the value, I'd probably only issue receipts on a by-request basis. It's easy enough to create a basic fill-in-the-blank form and keep a few handy at checkout.