What Constitutes a Quid Pro Quo or Token Gift for Charitable Contributions?

If you've read Nolo's nonprofit books, you know that when thanking donors for gifts to your nonprofit, there's no need to subtract out the value of insubstantial or low-cost items. Here are the 2023 and 2024 figures on what qualifies.

By , J.D. · University of Washington School of Law

As readers of Nolo's books on nonprofit fundraising and management know, nonprofits are legally required to send a written disclosure to anyone who makes a single charitable gift of $75 or more and who receives something in return. For example, radio stations commonly send books, DVDs, and other gifts to those who pledge support.

This acknowledgment letter (which can take the form of a regular thank-your letter or an email) should state the fair market value of any gifts or rewards the nonprofit sent to the donor.

Why Do Nonprofits Need to Advise Donors of a Thank-You Gift's Market Value?

Giving donors a heads-up regarding the market value of their donations could be crucial to donors who itemize deductions when it comes time to fill out their annual income tax returns. The donors will need to subtract the amount of the gift from the amount of their donation before taking a charitable tax deduction.

What Exceptions Can a Nonprofit Use to Avoid Advising Donors of the Fair Market Value?

There is no need for a nonprofit organization to tell donors to subtract out the value of return gifts in two situations:

  1. the gifts were merely token, "insubstantial" items, or
  2. the gifts were low-cost in comparison to the overall donation.

The exact dollar amounts of what constitutes "token" or "low-cost," however, change year by year.

According to the IRS's latest inflation adjustments regarding quid pro quo contributions, to qualify as insubstantial goods or services, they must cost your organization no more than $12.50 to produce for 2023, or $13.20 for 2024; they must bear your organization's name or logo; and the contribution received must have been at least $62.50 in 2023 or $66 in 2024. (Things like tote bags, coffee cups, or stickers are typical such name/logo items.)

Regarding the exception for low-cost items, these must, for 2023, either have a fair market value of $125 or less or be worth 2% or less of the donor's payment, whichever is less. For 2024, it will be $132 or less.

The above token and low-cost limits are regularly adjusted. See IRS Publication 1771, Charitable Contributions Substantiation and Disclosure Requirements, for more information.