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 Articles
  1. Investing

    Can I donate stock to charity?

  2. Personal Finance

    Don't Judge A Charity Based On Administrative ...

  3. Entrepreneurship

    How To Start A Charity

  4. Retirement

    Gifting Your Retirement Assets To Charity

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center