Deducting Charitable Donations Part 1 – Qualified Organizations

Every year, Americans have been giving billions of dollars of donations to charity. Thanks to the government for giving out the incentive to do so: deducting those donations from your taxes. However, there are certain rules on what can you deduct, what organization qualifies, and how much you can deduct. This is a three part series and we’ll discuss the qualified organizations first.

Part 1 – Qualified Organizations – You can only deduct donations if these are made to qualified organizations. Also discusses organizations that are not qualified by the IRS.

Part 2 – Items You Can Deduct – Discussed the items that you can or cannot deduct and the various reporting requirements.

Part 3 – Limitations on Your Contributions – discusses on how much donations you can deduct for the yea

Organizations That Qualify To Receive Deductible Donations

Your contributions are only deductible if you donated them to qualified institutions. Governments and churches are considered qualified institutions but for other organization to qualify, they must apply to the IRS to do so. The following types of organization can be qualified organizations:

  • A community chest, corporation, trust, fund, or foundation organized or created in or under the laws of the United States, any state, the District of Columbia, or any possession of the United States (including Puerto Rico). It must be organized and operated only for one or more of the following purposes: religious, charitable, educational, scientific, literary, the prevention of cruelty to children or animals.
  • War veterans organizations
  • Domestic fraternal societies and associations
  • Certain nonprofit cemetery companies or corporations
  • The United States or any states, the District of Columbia, a US possession (including Puerto Rico), a political subdivision of the State or US possession, Indian tribal government or any of its subdivisions.

Examples:

  • Churches, temples, synagogues, mosque and other religious organizations.
  • Most non-profit charitable organizations such as Salvation Army, March of Dimes, United Way, Red Cross, Catholic Relief Services, etc.
  • Most non-profit educational organizations such as universities, colleges, research facilities, museums, Boy and Girl Scouts of America, and daycare centers (if substantially all the child care provided is to enable parents to be gainfully employed and the services are available to the general public.)
  • Other non-profit organizations such as hospitals, medical research organizations, volunteer fire companies.
  • Public parks and recreation facilities
  • Civil defense organizations.

Organizations That Do Not Qualify

Not all charitable contributions can be deducted. If you made contributions to the following types of organizations, your contributions may not be deductible:

  • Contributions to individuals – this includes expenses paid for another person who provided services to qualified organization, payments to a member of a clergy that can be spent as he or she wishes such as personal expenses, payments to a hospital that are for a specific patient’s care, contributions to fraternal societies made for the purpose of paying medical or burial expenses of deceased members.
  • Certain state bar association if: the state bar is not a political subdivision of the state and the bar has private as well as public purposes such as promoting professional interests of the members and the contribution is unrestricted and can be used for private purposes
  • Civic leagues and associations
  • Communist organizations
  • Country clubs and other social clubs
  • Chambers of commerce and other business leagues or organizations.
  • Foreign organizations
  • Homeowner’s association
  • Political organizations and candidates
  • Labor unions