Quid Pro Quo Contribution

A quid pro quo contribution is a charitable gift for which the donor receives something of value in return from the charity. Unlike a pure donation where the donor receives nothing, a quid pro quo arrangement provides an incentive—such as goods, services, event admission, or merchandise—in exchange for the contribution.

How it works and how it differs from a regular donation

• Regular charitable donation: donor receives nothing; the full gift may be deductible (subject to tax rules).
• Quid pro quo contribution: the donor receives goods or services. For tax purposes, the deductible portion is the difference between the total payment and the fair market value (FMV) of what the donor received.

Tax treatment and documentation

• Deduction calculation: Deductible amount = total contribution − FMV of goods/services received.
• Recordkeeping: Donors should keep receipts showing the total payment and any disclosure statement from the charity describing the value of goods or services received.
• Charity disclosure requirement: If a donor’s payment for a quid pro quo contribution exceeds $75, the charity must provide a written disclosure statement that informs the donor of the value of goods or services provided (or a good-faith estimate). This helps donors calculate the correct deductible amount.
• Check current IRS guidance for any temporary or special rules that may affect deductibility.

Example

Beth donates $75 to her daughter’s school. As a thank-you, the school gives her a $5 gift certificate to the school farm stand. Because this is a quid pro quo contribution:
– Total payment = $75
– FMV of goods received = $5
– Deductible amount = $75 − $5 = $70

If the school’s gift to Beth had been valued at $0 (no goods or services provided), she could have deducted the full $75.

Practical tips

For donors:
– Ask the charity for a written statement detailing the value of any goods or services received.
– Subtract that value from your payment when calculating the charitable deduction.
– Keep receipts and the charity’s disclosure for your tax records.

For charities:
– Provide timely written disclosure to donors when quid pro quo payments exceed the required threshold.
– Make the FMV or a good-faith estimate clear so donors can determine deductible amounts.
– Maintain records of donor payments and any goods/services provided.

Key takeaways

• A quid pro quo contribution includes a benefit to the donor in return for their payment.
• The allowable tax deduction is the contribution amount minus the FMV of what was received.
• Charities must issue written disclosures for qualifying quid pro quo contributions to help donors substantiate deductions.

Sources:
– Internal Revenue Service — Substantiating Charitable Contributions
– Internal Revenue Service — Guidance on charitable contribution tax benefits and disclosure rules