Quid Pro Quo Contribution

AAA

DEFINITION of 'Quid Pro Quo Contribution '

A charitable donation for which the donor receives something from the recipient in exchange. A quid pro quo contribution has different rules for federal income tax deductibility than a regular charitable contribution, for which the donor receives nothing from the charity in return. The IRS considers as tax deductible only the amount of the contribution in excess of the value of the good or service the charity gave the donor.

INVESTOPEDIA EXPLAINS 'Quid Pro Quo Contribution '

During her favorite public radio station’s local pledge drive, Ann donates $150. As a thank you from the radio station, she receives a gift certificate for a cooking class that would normally cost $70. (The public radio station is able to offer such a generous premium because a sponsor donated it.) Ann’s contribution is considered a quid pro quo contribution because she receives something in exchange for her donation.

Since Ann donated more than $75, the Internal Revenue Service requires the public radio station to send her a letter stating that the amount of Ann’s $150 contribution that is deductible on her federal income tax return is limited to $80 – the amount of her contribution minus the $70 fair market value of the cooking-class gift certificate she received.

RELATED TERMS
  1. Proof of Charitable Contributions

    Substantiation required by the Internal Revenue Service for a ...
  2. Readvanceable Mortgage

    A mortgage feature that allows the borrower to re-borrow the ...
  3. The Smith Maneuver

    A strategy that makes interest on a residential mortgage tax-deductible ...
  4. Charitable Contributions Deduction

    One of the itemized deductions available for taxpayers who donate ...
  5. Form 4684: Casualties And Thefts

    A tax form distributed by the Internal Revenue Service (IRS) ...
  6. Charitable Gift Life Insurance

    A method of contributing to charity by taking out life insurance ...
RELATED FAQS
  1. Can I donate stock to charity?

    Giving stock, instead of cash, as a donation can greatly benefit both parties. You will find that most charities, hospitals, ... Read Full Answer >>
Related Articles
  1. Personal Finance

    Don't Judge A Charity Based On Administrative Costs

    It is unwise to base charitable giving on administrative costs.
  2. Entrepreneurship

    How To Start A Charity

    Here's a detailed guide that provides the steps needed to start a charity.
  3. Retirement

    Gifting Your Retirement Assets To Charity

    There are several things to consider when it comes to this type of charitable giving. Make sure you're well informed.
  4. Personal Finance

    Charity CEOs: Are They Being Paid Too Much?

    Deciding how much charities should spend on the salaries of their CEOs is more difficult than you may think.
  5. Personal Finance

    Is The Billionaire Charity Pledge A Good Idea?

    Will Bill Gates' call for billionaires to become more active in charitable giving do all the good it could?
  6. Taxes

    Give To Charity; Slash Your Tax Payment

    Being generous has never been more (financially) rewarding!
  7. Taxes

    How To Spot Dubious Haiti Charity Pleas

    Make sure your dollars get to the earthquake victims, not the scamsters.
  8. Bonds & Fixed Income

    A Look at the Pros and Cons of Muni Bonds

    Considering muni bonds? Here's a look at their pros and cons.
  9. Options & Futures

    Options and Roth IRAs: Do's and Don'ts

    A breakdown of the do's and don'ts of trading options in a Roth IRA.
  10. Taxes

    OK, So I'll Be Smarter Next Tax Time

    5 tax resolutions to start on right now for a smoother tax return next April 15.

You May Also Like

Hot Definitions
  1. Loan-To-Value Ratio - LTV Ratio

    A lending risk assessment ratio that financial institutions and others lenders examine before approving a mortgage.
  2. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  3. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  4. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  5. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  6. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
Trading Center