What Is "Quid Pro Quo?"
Charities appreciate and frequently honor their donors. In many ways, charities attempt to demonstrate that appreciation through plaques, dinners, conferences and other tangible ways. One of the challenging issues for the Treasury has been how to regulate fairly the many benefits that donors receive from their gifts to and associations with charities.
The basic description of "quid pro quo" is "this for that." In essence, the donor makes a gift and the charity transfers goods, services or benefits back to the donor. If a donor's gift exceeds $75 and there is a "quid pro quo," then the reporting requirements are triggered. Sec. 6115(a).
"Quid Pro Quo" Gift Over $75
If the gift is $75 or more and goods or services are transferred from the charity to the donor, then a receipt must be given to the donor. The receipt should show the value of the gift and the charity's good faith estimate of the goods and services. The charity may use any reasonable valuation method. Reg. 1.6115-1(a)(1).
Example 1.6.3A
A college choir is planning a concert. The normal price of the concert is $30. However, all members of the President's Council are invited to attend and receive preferential seating. The President's Council members are asked to pay $100.
Since the gift is $100 and the value is $30, the deduction is $70. The college may disclose on the invitation to the President's Council members the fact that their gift of $100 has an offsetting "quid pro quo" of $30. The net deductible gift amount is then $70. Reg. 1.6115-1(a)(1).
Example 1.6.3B
Some types of transactions require no "quid pro quo" disclosure. For example, a member of the President's Council sends his grandchild to the college and writes a check for $10,000 for tuition. This is a non-deductible payment and thus requires no disclosure by the college. In addition, the same President's Council member purchases $500 of books at the college bookstore. Once again, there is no gift element and no disclosure required. Finally, the same President's Council member makes a gift of $1 million for the new fine arts center and the building is named after her. Since this is an intangible benefit, again no disclosure of a "quid pro quo" is required.
