Fundraising Oops: Thank-You Letter With Backwards Tax Info

A nonprofit thank you letter for a donation serves two purposes: It furthers the dialogue between the organization and the donor (hopefully making the donor feel good about the great uses to which the gift will be put), and it gives the donor something to tuck away in those tax files, to be brought out next April 14th. (Oh, do other people start their taxes earlier than that?)

So I didn’t know whether to laugh or cry when I recently received a thank you letter for a $50 donation that I’d made, where the last line read, “Estimated value of benefits received in consideration of this donation is $47. The portion of the contribution exceeding the fair market value of  benefits received is tax deductible as allowed by law.”

What’s so laughable/cryable about that? Hold on, you need a little more information: The “benefit” that I received for my $50 was a canvas tote bag, pretty clearly hand silk-screened. And there are two very large problems with that:

  • There’s no way the FMV of the tote bag is $47.  And if it was, I wish they had not bothered to send me such a gift, because that would leave me with a mere $3 tax deduction. More likely they got it backwards — they’re estimating the FMV of the tote bag at $3, which should have been the amount stated in the first sentence.
  • I suspect that the tote bag is of “token” value — that is, an item that bears the organization’s logo (which it did), cost it no more than $9.50 to produce (which it must have), and was given in return for a donation of $48.50 or above. A nonprofit doesn’t even need to mention the fair market value of token items in its thank you letters.

For more information on requirements for a thank-you letter, and related tax issues, see The Volunteer’s Guide to Fundraising.