Charitable contribution deductions in the United States

Charitable contribution deductions for United States Federal Income Tax purposes are defined in section 170(c) of the Internal Revenue Code as contributions to or for the use of certain nonprofit enterprises. See 26 U.S.C. § 170(c).

Certain portions of the market value of non-cash donations, such as short-term capital gains, are made non-deductible by I.R.C. 170(e)(1)(A).

An organization must meet certain requirements set forth in the Code. Some organizations must also file a request with the Internal Revenue Service to gain status as a tax-exempt non-profit charitable organization under section 501(c)(3) of the tax code.

A non-exhaustive list of organizations that may meet the Federal requirements are as follows:

There are both public and private charities. Public charities are far more common.

Contributions to charitable organizations are deductible to the donor, unless the donee organization uses any of its net earnings to benefit a private shareholder, or if it attempts to in any way influence political campaigns or legislation.

A contribution to a charitable organization need not be fully a "gift" in the statutory sense of the word to be deductible to the donor. The donor's allowable deduction will be reduced, however, by the amount of the "substantial benefit" conferred upon them as a result of their contribution.

To illustrate, suppose that the American Cancer Society is hosting a formal dance as a fund-raiser (the ACS is a certified charitable organization). Further suppose that the fair market value of a ticket to the dance is 75 USD, and that the donor pays 375 USD to purchase a ticket. The donor may claim only a 300 USD deduction, because the amount contributed (375 USD) is reduced by the amount of the benefit that he received (75 USD, the fair market value of the ticket). This holds true even if the donor does not actually attend the dance.

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