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Non-Tax-Deductible Donations

Last modified: May 7, 2023
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Certain intangible in-kind gifts are not tax deductible to the donor.  The most common examples include:

  • Pro bono services
  • Donations of rent-free space

These are areas of much confusion to many nonprofits.  The IRS allows donations of both to be made to charities, but the donations are not tax deductible.  In the case of pro bono services, the item truly being donated is time.  The IRS has deemed that the fair market value of gifts of time cannot established.  Donations of rent-free space is considered the gift of a partial interest in a property, not the gift of the entire property.  Therefore, forfeited rent is not considered a tax-deductible gift, either.

Direct expenses associated with gifts of either may be tax-deductible, depending on the circumstances.  Donors of either should consult their tax advisor.

It is not necessary for sponsored projects to report gifts of these types to Compass, though they are encouraged to do so via their project portal.

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