Finance May 2006 Goods or Services Provided in Order to Raise Money Money raised as a result of an individual’s efforts and including some goods or services (Indian food, blueberries, etc.) becomes a donation from the person providing the goods or services. That person receives an acknowledgment letter for the donation.
Finance July 2007 Goods or Services Received by a Donor We clarified two kinds of donations involving goods received:
1) Sale of Goods to Benefit KCC
When an individual offers goods for sale to benefit KCC, it can be done one of two ways:
a) The individual providing the goods can sell them directly and donate the proceeds to KCC.
b) The individual can make an in-kind donation of the items to KCC, and KCC will sell them through the Bookstore. Purchases through the Bookstore are not tax-deductible contributions. In this case, Finance will determine the value of the items for internal purposes, and the in-kind donation will be credited to donations and debited to bookstore expense. Per IRS rules, the donor is responsible for determining the amount that is tax deductible for purposes of his/her taxes.
2) Quid Pro Quo Donations
If an item or service of value is offered in turn for a donation, the fair market value (FMV) of the item or service is not tax deductible. The amount that is tax deductible is the total donation minus the FMV of the item or service. Per IRS rules, it is KCC’s responsibility to provide the donor with a clear statement of the item’s FMV.