Year-End Receipting Do’s and Don’ts

It’s that busy time of year for nonprofit organizations. Donors’ thoughts are turning toward sharing their good fortune with their communities… and possibly nabbing some tax savings too. Do you know the proper way to receipt your year-end donations based on IRS rules? It can be tricky, and the gift date matters: gifts made in 2013 can count toward this tax year, but those made in 2014 count for next year. And to make it complicated, different giving methods (cash, credit card, check, etc.) have their own tax rules that dictate on what date a gift may be counted.

It’s all about determining when donors have officially relinquished control of their gifts. Here are some quick tips for some common giving methods:

1) Cash and checks

Cash and checks have left a donor’s control once they have been handed over to you physically, or sent via U.S. mail. So, if a check is postmarked on or before December 31, the gift may be counted toward this year’s taxes. It is interesting to note that gifts sent via FedEx or UPS are not considered to have left a donor’s control until they are physically received by a nonprofit. This is because using these services, a donor might recall their gift at any time.

2) Credit cards

A credit card gift has not left a donor’s control until the credit card itself has been charged. This is why it is essential to ensure that your staff opens all mail received on or before December 31. Make sure that you charge credit cards before midnight so that donors may fulfill their intention of making a gift this tax year. For credit card gifts sent by mail, postmark does not count.

3) Stock

Stock must be received in the nonprofit organization’s brokerage account before it is considered to have left a donor’s control. This is why it is essential that donors of stock initiate the transfer well in advance of the last day of the month. Keep this in mind when you are working with prospective donors of stock gifts.

For more on this topic, check out John Taylor’s “annual date of gift message” from last year. John is a guru of Advancement Services, and frequently weighs in on topics such as this on the FUNDSVCS listserv, a great resource for gift processing and records issues.