Nonprofits Cancel Events Due to COVID-19 – Considerations for Contemporaneous Written Acknowledgment

Many charitable organizations host fundraising events such as dinners, galas, or balls for their organizations; however, with the federal, state, and local declarations that limit social gatherings due to the COVID-19 pandemic, many of these events have been canceled. While considering how to issue gift letters to donors may not have been of the highest priority at the time the events are canceled, it is one of the more finite details that needs to be addressed.  

Customarily a ticket to a fundraising event is sold at a price-point that would cover the cost of the event, and any excess in the price of the ticket compared to the value received would then be an inherent donation. In these situations, where the donor receives goods or services in exchange for their contribution, it is called a quid pro quo donation.    

Each quid pro quo donation in excess of $75 requires a written statement or letter known as contemporaneous written acknowledgment. The basis for contemporaneous written acknowledgment stems from Internal Revenue Code (“IRC“) §170(f)(8), which addresses direct donations in excess of $250. However, once a good or service is returned to the donor, the requirement for a letter drops down to $75.  

Example: If ABC Company donates $150 to a nonprofit entity and, in return, receives two tickets valued at $100, when determining if the donation is quid pro quo, the amount considered is the $150 gross contribution, rather than the $50 net contribution.  

Per IRC §170(f)(8) a contemporaneous written acknowledgment must include the following items: 

  • the amount of cash and a description (but not the value) of any property other than cash contributed, 
  • whether the donee organization provided any goods or services in consideration, in whole or in part, for the contribution; and 
  • a description and good faith estimate of the value of those goods or services; or 
  • if the goods or services consist entirely of intangible religious benefits, then a statement to that effect.  

Without the letter described above (or even a letter lacking one component of the above), the charitable deduction to the donor could be disallowed. 

At this point, with the cancellation of events we have a few items to consider in issuing this year’s contemporaneous written acknowledgments: 

What should you do with canceled events that have a refund policy? 

If your nonprofit organization has a canceled event with a refund policy, consider reaching out to donors to see if they would like a refund or if they would like to convert the ticket to a contribution. A letter can go out asking for affirmative communication of the donation, or the letter can say the ticket will be considered a donation if a refund is not requested by a certain date.  If the ticket is converted to a donation the nonprofit should consider: 

  • Sending an updated or revised letter to the donor reflecting the new treatment of their payment 
  • Combining the ticket conversion to the donors annual giving records 

In the case of a ticket to charitable conversion,’ the ticket is considered refunded, and then the cash is donated to the organization. As such, the contribution is no longer a Quid Pro Quo Donationin this situation, the requirement for contemporaneous written acknowledgment is for contributions over $250 rather than contributions over $75.  

In circumstances where a refund is not required, consideration should be given to both the monetary aspect as well as the resulting reputation of the organization, not offering refunds to their community members.

Furthermore, if the organization did not have a refund policy and the organization was to keep the ticket revenue even though the event was canceled, refer to the discussion in question 2 below. Under those circumstances, the organization would want to issue contemporaneous written acknowledgment for contributions over $75. If a refund is issued, no contemporaneous written acknowledgment would be required, unless your organization already issued a letter in which the case the letters will need to be reissued to reflect the refund and no charitable contribution. 

Does the perceived value of goods or services qualify a donation as quid pro quo? 

The determination of a quid pro quo donation is actually determined at the time the donation is made.  If at the time the taxpayer contributes, the taxpayer receives or expects to receive goods or services in exchange for the contribution, it is a quid pro quo donation.   

In making this determination, each donation is subject to its own facts and circumstances.  In events where tickets are sold, there is an express promise made by the donee organization, and therefore the donation is clearly quid pro quo.  However, a donation can be considered quid pro quo even when a direct promise is not made by the donee organization, but the donor expects that a benefit will occur.  For example, if a donor contributes and has an expectation to be invited to a donor appreciation dinner because other donors at that contribution level have received invitations to similar events in the past, that donation is also considered quid pro quo.  Even though the donee organization made no express promise, it is the facts and circumstances of determining a donor’s expectation to receive goods and services that can qualify a donation as quid pro quo.  

This point is made even more evident in Rev Rul. 67-246. Within Rev Rul. 67-246, if goods and services, in this example tickets, provided to the donor are rejected at the time of donation, then the donation all though initially quid pro quo would not be considered as one and the donee organization would not have to disclose it as such. It is important to note that the donor cannot merely accept and not use the tickets, but in order for a donor to keep the full value of their charitable deduction, they must not accept or keep the tickets. Due to the fact that the donor must reject the goods and services at the time the donation is made in order to reclass the character of the donation from a quid pro quo donation, Rev Rul. 67-246 shows that the classification is determined at the time of the gift.  

Based on the facts above, all donations made for these canceled events would remain as quid pro quo donations because at the time the donations were made, there was an expectation that the donor would be receiving goods and services.  As such, until there is evidence, proof, or substantiation that states otherwise, the IRS will likely disallow deductions for donations made for these events.  Even partial deductions related to these events would be disallowed without the substantiation of a gift letter with its stated value of goods or services.  

In order for the taxpayer to keep the deduction, especially in cases where the events have been canceled, and no goods or services were rendered, it is pertinent for the donee organizations to issue contemporaneous written acknowledgment and explicitly state that no goods or services were received in connection with the donation amount.  Without this substantiation to prove that the donation is now fully deductible, the IRS will revert back to the idea that it was a quid pro quo donation in which the returned value of goods or services was not valued.   

If future tickets are offered, does that create a benefit? 

In some situations, organizations may postpone the event or provide options to exchange the canceled event’s ticket for a ticket to a future event.  The good faith estimate or value of goods received should include consideration that is anticipated to be received in future years.  The value of the ticket to future events must be disclosed in the gift letter. 

If a consolation gift/item is sent, does that need to be valued? 

If an event is canceled and an organization sends out a consolation gift for being unable to host the event, the good faith estimate or value of goods received should include the value of the gift provided.   

Where the acknowledgment states that the donee organization hasn’t provided any goods or services in consideration for the contribution, but the organization has, in fact, done so, the substantiation requirement has been violated, and no deductions will be allowed for the contribution. 

Additionally, where the letter from the donee acknowledging the gift disclosed some of the items received by the taxpayers in consideration for the contribution (and their estimated values), but not all items, the acknowledgment wasn’t considered to have disclosed the total consideration as required by §170(f)(8). Because the §170(f)(8) substantiation requirements were not met, no charitable deduction would be allowed in this situation either. 

There is an exception for items considered to be insubstantial, however.  To the extent benefits have insubstantial value, the full payment to the organization will be allowed as a charitable contribution deduction. For 2020 contributions, benefits received will be considered to have insubstantial FMV if the payment occurs in a fundraising campaign and: 

  • The FMV of the benefits received is not more than 2% of the payment or $112, whichever is less; or 
  • The payment is $56 or more, and the only benefits received are token items (mugs, calendars, bookmarks, etc.) whose cost does not exceed $11.20. 


Inherent in its name, the contemporaneous written acknowledgment should be issued in a timely manner. In Tax Court Memorandum 2012-140, a donor was disallowed a charitable deduction because the first letter that was timely issued was missing required information under §170(f)(8). A second letter issued 18 months later was subsequently disallowed because the second letter was not contemporaneous, and the court refused to recognize it.  As such, time is of the essence in issuing complete and accurate letters from the donee organization.


Due to the various considerations and components discussed above, it is recommended that organizations allow more time to look at their valuations for 2020.  Factoring in all of the items that have come with the canceled events of 2020 will add some additional administrative work in issuing 2020’s contemporaneous written acknowledgment.  

If you have any questions about how this applies to your organization, please contact us