19 – Issuing Receipts

(Formerly Standard 13)

PGTS Standard

Issuing Receipts

Issuing the proper receipt is not just a PGTS Standard; it is a governmental requirement for the donor to receive their charitable tax benefit, and it is a valuable tool to help protect your organization and the constituents you are serving.

In the United States and Canada, charitable organizations must issue a receipt to the donor whenever a charitable contribution is made. This receipt substantiates the donor’s charitable tax deduction or tax credit, and we would be doing a disservice to the donor if we did not provide this important tax document.

Legal & Reputational Benefits

Receipts are also significant legal documents. When properly administered, they are typically accepted in a court of law as evidence of receipt of an item. How much is a receipt worth? One organization had to pay an additional $200,000 to retain possession of real estate when they could not produce receipts documenting payments made or a release of the trust deed proving the promissory note was paid in full.

Receipts can also help protect the reputation of your organization. For example, one irritated family member accused an organization of losing their parents’ original last will and testament, but a receipt was on file signed by the parents stating they had taken the original document many years before to store themselves. The family was still upset, but they could not blame the organization because of the receipt in the file.

WHAT CONSTITUTES A VALID RECEIPT?

A charitable receipt is any document that contains the following six IRS-required elements:

1. Name (of a person paying, releasing, delivering, or receiving any documents)
2. Transaction date (when you paid, released, delivered, or received the documents)
3. Detailed description (of goods or services purchased or released, or document delivered or received)
4. Amount of cash paid or directions from the donor (fair market value or cost basis of the item delivered or received; direction for what is to be done with the document)
5. Form of payment, release, or delivery of received item (how you paid—cash, check, or last four digits of credit card; original or copy of the document)
6. Designation or acknowledgment of person or organization being paid, released, delivering, or receiving the document (confirms that the release or transfer was made)

What delivered or received items require your organization to issue or receive a receipt?

Examples:

1. Currency or check
2. Stock, bond, or any other security (use information from the broker to issue receipt and average of the high and the low for the day of trade to establish value)
3. Art, collections, or other types of tangible personal property (get an appraisal if required, then issue receipt; if an appraisal is not required, then issue an acknowledgment letter that does not establish value)
4. Land, buildings, vehicles, inventory, or equipment (establish value by appraisal)
5. Technologies, patents, copyrights, other intellectual property (value by appraisal)
6. Certificates, deeds, titles (issue an acknowledgment with a copy to the donor when document received)
7. Anything that a trustor gives you as a donation or to store in their document file in your vault for safekeeping (acknowledgment at the time item is received and again when the item is returned)

Your organization may already have a standard printed receipt you can carry with you as you make visits to your donors. You should always be prepared if the need arises to issue a receipt. But what if you are caught off guard and do not have a preprinted receipt? You can always handwrite a receipt if you include the six required elements previously listed. If a copy machine is not available, you may write it twice, so you have a receipt to leave with the donor and one to put in the file when you return to the office. This handwritten receipt can also serve as a reminder to issue a formal printed receipt when you return to the office.

Checklists

Despite all the benefits of issuing a receipt, incorrectly signed receipts and missing receipts is among the most frequent findings on Trust Review reports. Two standards require gift planners or trust officers to issue or receive a receipt. Standard #19 deals with issuing receipts when PGTS personnel receive assets. This standard is not to be confused with receipts sent to beneficiaries receiving distributions from matured estates required in standard #30.

Most of these findings can are avoidable when the organization uses the proper checklist to guide its processes. Checklists are required for managing trusts and charitable gift annuities by standard #25 but may be utilized for other tasks. For example, the checklist is a helpful reminder when working with many donors, trustors, and beneficiaries of matured trusts or estates that a receipt, release, or acknowledgment has been requested, and a checklist also helps you track which documents have been received and placed in the appropriate file.