Short term mission fund-raising is tough. The money is never just sitting in a bank account waiting to get spent, the team has to work really hard to raise it. The worst thing would be to raise the money and then get fined for improperly reporting it to your government, or worse, losing your charitable status.
Have you ever wondered what is allowed and what is wrong for a charitable donation? You want to get this right. If you have ever been confused, make sure you are not making one of these three simple (and common) mistakes.
1. Gift in Kind
YES, it is possible. When people or businesses make a donation, they can get a receipt for the value of their donation as Gift in Kind. A really easy and straightforward way to do this is for you to pay for the goods or service and then have the vendor donate that same amount back to your charitable organization.
But, it is important that the value of the GIK donations must be the same as the normal actual value of the good or service. The gift should never be receipted at an inflated value. E.G. if a merchant donates a free nights stay at a hotel, you can give them a receipt for the actual value of that nights stay
2. Silent Auctions
Generally NO. If someone bids on a silent auction item and wins, they not making a donation, they are paying for a good or service. Therefor, if they donate less than the value they are getting a great deal … and they are not going to get a tax receipt as well. The donation is from the person who donated the good or service – you can’t give two receipts for that item.
Most importantly, there is an exception. If the winning bidder pays above the market value of the item, they can receive a tax receipt for the amount of donation ABOVE the value of the item. E.G. Aunt Mabel makes pies for a pie auction and your church gets into a fun bidding war for those pies. The pies sell at $300 each. The market value of the pie might be closer to $20 for the ingredients and Aunt Mabel’s time. In this case, a donor could receive a receipt for $280 ($300-$20). Mabel makes a fine pie …
3. Fund-raising Banquets
YES and NO. At least not the whole ticket. A donor can only get a tax receipt for any portion of the ticket price above the actual meal costs. E.G. You hold a fundraising dinner and invite the community to come in at $50 a ticket. You need to figure out the actual cost of the meal. If the meal costs $25 to put on, then the donor can get a receipt for a donation of $25, not the whole $50
So you may be seeing the trend here. If there is any benefit to the donor, they can only be receipted for the donation amount outside of that benefit. A donor cannot get a tax receipt for any portion of an event where they get something personally.