Quid Pro Quo Contribution
Candlefocus EditorQuid pro quo contributions are typically made through fundraising campaigns. Charities often use a variety of incentives to motivate donors to give, whether it’s a raffle entry or a gift certificate for a restaurant. The amount of the donation made by the donor is the cost of entry for the incentive. For instance, someone wanting to enter a raffle for a free weekend stay at a resort might give the charity $20. In this case, the donor needs to deduct the dollar value of the resort stay from their donation in order to arrive at their correct windfall amount to claim as a deduction on their taxes.
Some businesses use quid pro quo contributions as an opportunity to promote their products and services. They offer their item or service as an incentive for a donation, in the same way organizations offer raffles and gift certificates. For instance, a car dealership might offer a free oil change as an incentive for a donation. The car dealership benefits by gaining valuable exposure in their local community, while the charity receives a donation from individuals that wouldn’t have donated otherwise.
Another type of quid pro quo contribution is commonly used in volunteer programs. Many organizations offer volunteers a gift or discount as a reward for their hard work and dedication. These can range from merchandise such as t-shirts and hats, to discounts on future purchases. The cost of such incentives are usually deducted from the tax-deductible portion of the donation, so the volunteer can still receive the full tax benefit.
Overall, quid pro quo contributions are an effective way to incentivize donations while still providing the tax benefits to donors. While organizations must track and manage the cost of the incentives provided to donors, it can be a great way to reward individuals for their support of the cause. Whether it’s used as a reward for volunteer programs or as an incentive for a donation, the quid pro quo contribution helps both sides reap the benefits.