Jennifer Morrison, CPA, MBA
Finance Expert and Consultant
Jennifer Morrison formerly served as Bethel's Chief Financial Officer and Director of Finance, and now serves Bethel as a consultant. Prior to her work at Bethel, Jennifer was an auditor for a regional public accounting firm, specializing in not-for-profit and government entities, and as an internal controls auditor for a Fortune 500 company.
Jennifer received her Bachelors of Science degree in Accounting, cum laude, from the University of Tennessee at Chattanooga and her Masters of Business Administration degree from East Tennessee State University. She is a CPA licensed in the state of Tennessee. Jennifer is an active member of Silverdale Baptist Church.
When you give to 501(c)(3) organizations, like Bethel, your gift is typically considered tax deductible, as long as the donation meets certain IRS criteria. For most people, tax laws can be confusing – especially when it comes to certain donations known as “restricted gifts.”
So here are some simple tips to help you understand the criteria, and to make the most of your next gift to Bethel Bible Village.
What are the general criteria for tax deductible donations?
- Gifts must be made to an organization, like Bethel, which is qualified by the IRS under section 170(c)
- Gifts must be in the form of cash or property (not services or time).
- Gifts must not be for the donor’s personal benefit. However, the IRS allows you to take a deduction for any amount in excess of the fair market value of the benefit received.
- Gifts must total less than 50% of your AGI. (The amount for other qualified non-501(c)(3) organizations may be less.)
- Gifts have to be itemized on Schedule A of your annual tax return (Form 1040).
“Restricted” gifts must meet additional criteria to be considered deductible.
What is a restricted gift?
Some donors prefer to make donations that are permanently or temporarily restricted, for either a specific purpose or a specific time period. For example, someone can give money and stipulate that it can only be used for education, or for feeding children.
The idea of “restricting” gifts is typically considered a financial accounting issue, and that can make it difficult to find the information you need at tax time. These are the important guidelines you need to consider:
- The qualified organization must have discretion over the gift.
While a gift may be given for a specified purpose, the qualified organization must still have discretion over the disbursement of funds in order for it to qualify for a deduction. That means, the organization must choose when and where the funds are spent.
For example, a donor may make a deductible donation and restrict it for the purpose of education. While the organization is obligated to only spend this money for education (and document it), they still have discretion over exactly what type of educational supplies or services they purchase and who they are purchased from.
- The gift may not be designated for a specific individual.
A donor may not use a qualified organization as a “pass through” for a gift to an individual and consider it a deductible contribution. The IRS specifically prohibits this.
However, a gift can still be tax deductible if it meets all the criteria described above, and is made for a group of individuals within the qualified organization. For example, a donor may make a contribution to a children’s home for all boys to go on an outing (assuming all above criteria are met). This is considered tax deductible, as long as it not limited to one specific child in the group.
If you would like more information or clarification on the items above, or for a more detailed and all-inclusive narrative of deductible and non-deductible charitable contributions, please see IRS Publication 526.
If you are interested in giving to Bethel Bible Village, we thank you. We try to make it easy with online and text giving. You can find more information here.
This post is not intended to be all-inclusive or applicable to your specific situation. Any accounting or tax advice given is not a substitute for a formal opinion. Please consult your tax professional for guidance on your specific situation.