Token Gifts to Donors
Administration of gift records by both donors and charities would be extremely difficult if every item, no matter how small, had to be recorded and recognized. Most charities recognize donors with various items such as a key chain, coffee mug, or plaque. Usually, the item includes the logo, colors and identification of the charity. Because reducing the gift deduction by a nominal sum would be administratively difficult, "token benefits" may be disregarded. Rev. Proc. 90-12, Rev. Proc. 92-49, Reg. 1.170A-1(h). Safe harbor rules have been created to allow various small transfers from charities to donors without recordkeeping or reporting. Reg. 1.170A-13(f)(8)(i)(A).
There are actually four categories under the rules. The basic rule is that the token gift may be up to 2% of the donor's gift value. However, for mid-sized gifts the token gift may be up to $13.20 in value for 2024. And for very large gifts, the token gift is limited to a maximum of $132 in 2024.
Small Gift Exception
Token items with the name or logo of the charity valued at less than 2% of the gift may be transferred to donors who make gifts up to $66.00.
Mid-sized Gift Exception
Token items with the name or logo of the charity valued up to $13.20 may be transferred to donors who make gifts between $66.00 and $660.
Large Gift Exception
Token items with the name or logo of the charity valued at less than 2% of the gift may be transferred to donors who make gifts from $660 to $6,600.
Very Large Gift Exception
For donors who make very large gifts, a token benefit of up to 2% of the gift value may be given up to a maximum of $132.
Example 1.6.2A Mid-sized Gift Donor
Donor Mary Smith makes a 2024 gift of $75. She receives a key chain valued at $4. Since her gift is in excess of $66.00 and the value of the key chain is less than $13.20, the token benefit may be disregarded. The charity may note that the value of the key chain is not sufficiently large to cause a reduction in her contribution. Her full $75 gift is deductible.
Example 1.6.2B Very Large Gift Donor
Mary Smith also makes a gift of $1 million to the university for a fine arts center. The university gives Mary a plaque with a value of $132. She may receive the lesser of 2% of the gift (2% of $1,000,000 is $20,000) or $132 with no reduction of the gift. Since the $132 is less than $20,000, $132 is the applicable limit. She may thus receive her plaque with no reduction in the $1 million gift value.
Intangible Religious Benefits
Religious organizations exist to lift soul and spirit. While the value received is considered priceless by many religious followers, there is no reasonable method for determining the value of the religious benefit. Therefore, the value of such benefits is disregarded.
