Charitable contribution deductions
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).
Exclusions of certain
amounts from deduction
Certain portions of the market value of non-
cash donations, such as short-term capital
gains, are made non-deductible by I.R.C.
An organization must meet certain require-
ments set forth in the Code. Some organiza-
tions must also file a request with the Intern-
al Revenue Service to gain status as a tax-ex-
empt non-profit charitable organization un-
der section 501(c)(3) of the tax code.
A non-exhaustive list of organizations that
may meet the Federal requirements are as
• Synagogues, churches and other religious
• A fraternal order or lodge
• An organization of war veterans
• Any level of government if the
contribution is made for exclusively public
• An organization dedicated to the
improvement of public health in the U.S.
There are both public and private charities.
Public charities are far more common.
General Statement on
Benefit to Donor
Contributions to charitable organizations are
deductible to the donor, unless the donee or-
ganization uses any of its net earnings to be-
nefit a private shareholder, or if it attempts
to in any way influence political campaigns or
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. However, the donor’s allowable de-
duction will be reduced by the amount of the
"substantial benefit" conferred upon her as a
result of her 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 the donor pays 375 USD to pur-