Quid Pro Quo Contribution

A quid pro quo contribution happens when a donor makes a payment to a church and receives something of value in exchange. The classic example is a fundraiser dinner: a donor pays $150 for a ticket, but the dinner is worth $50. The deductible portion is $100 — the amount that exceeds the fair market value of what they received.

The IRS requires churches (and all charities) to provide a written disclosure statement for any quid pro quo contribution over $75. This statement must tell the donor that their payment includes both a contribution and a payment for goods or services, and it must provide a good-faith estimate of the fair market value of what the donor received. The disclosure must be provided at the time of the solicitation or the time of payment.

There are a few exceptions. "Token" items — things with minimal value that the church gives as thank-you gifts (like a bookmark, coffee mug, or bumper sticker) — don't reduce the deductible amount if they meet the IRS's insubstantial value thresholds (in 2026, items worth $13.50 or less, or items given in exchange for contributions of $67.50+ where the items cost the church no more than $13.50). Intangible religious benefits — like admission to a worship service, religious education, or participation in a religious ceremony — are also excluded and don't reduce the deduction.

Churches run fundraiser dinners, golf tournaments, auctions, and gala events all the time. Every one of these creates quid pro quo contribution situations. If you don't provide the required disclosure — or if you overstate the deductible amount on receipts — donors could face IRS penalties on their returns, and the church could face penalties of $10 per contribution (up to $5,000 per event) for failing to disclose. Getting this right is straightforward: estimate the fair market value of what you're providing, put the disclosure on the ticket or receipt, and your donors know exactly what's deductible.