I've been reading J.K. Lasser's Your Income Tax 2008, and apparently there's been a change in the requirements for charitable contributions. If a person donates money to a non-profit, their gift needs to be acknowledged in a particular way - or it won't be deductible :(

I'm not a lawyer or tax accountant, but it looks like they require:

- The name of the nonprofit
- The date of the gift
- A reasonably detailed description of what is donated
- A disclosure of whether or not the donor received any benefits in exchange, and the estimated value of those benefits.

Delving deeper, it appears this is only required for gifts over $250. But gifts over $75 still need the statement of exchanged value. And all gifts require paper proof, traditionally that might have been the donor's cancelled cheque, but those are disappearing thanks to the Check 21 law. My bank doesn't give me my cancelled cheques anymore, nor images, nor can they give me images. It's quite plausible that the only proof a donor might have is the nonprofit's reciept/acknowledgement.

So it might be a good idea to re-acknowledge 2007 gifts in the IRS-proscribed format. Never hurts to thank em :) might hurt not to.

Yep, and make sure to state that no goods or services were exchanged in return for the contribution if that indeed was the case.

There is a new form 990 out there too. A bit more paperwork for us non profits to fill out, but not insurmountable.

This is absolutely true. Until periods after August 17, 2006, it was acceptable to claim up to $250.00 of "undocumented" charitable contributions, in addition to those that there were documented with a donee receipt of contributions or other IRS acceptable documentation. This was to acknowledge the widespread use of collection methods that were designed to be cash only impulse donations, such as Salvation Army Christmas Kettles and the like. For a variety reasons, Congress and the IRS are generally increasing the recordkeeping requirements.

Effective this year, ALL charitable contributions must be documented. The best documentation is a receipt from the donee/recipient. You can read the rules from the horses mouth at:

IRS Pub 526 discusses the new rules in detail (from a contributors perspective):
http://www.irs.gov/pub/irs-pdf/p526.pdf

IRS Pub 1771 discusses documentation and substantiation requirements:
http://www.irs.gov/pub/irs-pdf/p1771.pdf

If you receive donate property, the determination of value is discussed in Pub 561.
http://www.irs.gov/pub/irs-pdf/p561.pdf

Microsoft has a contributions database template for Access 2000 (and later I presume)

At : http://office.microsoft.com/en-us/templates/TC010185821033.aspx

Here’s some tips for the brave new world:

1.) Keep accurate donation records, include the donor name and the purpose/restrictions if any, date of donation and time. Send acknowledgementts as required by IRS in publications linked above.

Nothing, I mean nothing reduces a donor’s charitable inclinations like for example, requiring three phone calls to obtain a donation receipt that proves to be inaccurate. (actual issue with one of my family members)

Its hard to measure, but I know a lot of people who donate expressly as a way of “getting even” with the IRS. Remember, when the tax bracket is 39.6%, a charitable donation of $100 means an after tax net cost of $60.40. Plenty of folks would rather give it away than have it taken.

Although it would make more economic sense to eliminate the charitable deduction. Organized Charity Lobbyists know how strong the desire is for tax avoidance (legally reducing taxes, as opposed to evasion, illegally) and will fight like heck to preserve the charitable deduction. As usual, however, the first rule of politics is to ignore the first rule of economics. Hence we are going to be burdened with paperwork. Its the governments version of a mail-in rebate. You want reduced taxes-we'll make you work for it.

2.) As a donor, pay by check and keep a copy/image. Most helpful when the charity isn’t engaged in the sale of goods or services (churches, volunteer fire departments) but always handy when a "how much" issue comes up above. Some charities will only keep records for members or registrants, because their donor database is driven off member rolls, but will gladly issue a statement if you present copies of cancelled checks, even though I think that's foolish. Your house of worship will usually be an exception, if they use an envelope system, where they record your cash contributions.

3.) Expect the 990 to become more ever-more demanding. Legislators, Iowa Senator Charles Grassley in particular see rather large amounts of money going to charities-in particular, electronically based mega-ministries whose payrolls seem to be hereditary dynasties. (It so burns our “public servants” when TV ministers have extended-range Gulfstream IV’s and they take a public-licking for seeking similar craft at taxpayer expense-as was the case with the current SOTHUS, Ms. Pelosi.) I doubt aircraft are a problem here, but the exception drives the rule and you know what rolls downhill and downstream.

There’s also the issue of terrorist funding-and for a variety of reasons, it would likely be impractical to limit charitable contributions to be expended stateside.

I'm seeing more details of the requirements in the Schedule A instructions, page A-8. http://www.irs.gov/pub/irs-pdf/i1040sa.pdf

Add to it "You (the donor) must get the statement by the date you file your return or the due date, whichever is earlier." So now's the time.

I don't believe cheques will be sufficient anymore. Cancelled cheques get destroyed, and a copy of a cheque not yet sent could be a total fiction.

As of now, checks are sufficient. I advise my tiny client base to get statements when possible, but cancelled checks will suffice according to Publication 526 and the regulations its still ok.

See the top of page 18.

I don't understand your reasoning. Unsent checks will not be cancelled and any document is subject to destruction, however the banking industry is rapidly moving to electronic imaged archival-so the paper copy is becoming irrelevant.