When giving volunteer appreciation gifts within a nonprofit organization, it’s important to strike a balance between acknowledgment and compensation. Gifts should be tokens of appreciation that align with the organization’s values and mission.
Gifts vs. Compensation
- Acknowledgment: Gifts are tokens of appreciation to encourage volunteer recognition.
- Compensation: It is important to avoid setting precedence for the expectation of gifts.
Legal and Ethical Guidelines
Nonprofits can offer small gifts to volunteers, such as:
- Occasional theater or sporting event tickets
- Holiday gifts of property (not cash) with a low fair market value
Bonuses and incentives for nonprofit executives should not be based on net earnings.
Gift-Giving Policies
Gifts to volunteers and stipends of limited value are deemed a “de minimis benefit” and are not taxable income. However, payment should never exceed a nominal 20% of what an employer would pay for the same service.
Donor Thank-You Gifts
- Some nonprofits provide a premium to donors who contribute at a certain level or become organization members.
Tax Considerations
- Gifts to individuals are generally not tax-deductible.
- The IRS allows individuals to gift up to $15,000 annually to others without tax implications for the recipient.
Can Nonprofits Give to Others?
- Nonprofit to Nonprofit: A 501(c)(3) organization may donate to another 501(c)(3).
- To Individuals: Nonprofits can give financial assistance to individuals if it serves their charitable purpose.
- To Founders/Employees: A nonprofit founder can draw a reasonable salary and nonprofits may pay employees for their work.
Payment for Volunteers
- Once a cash gift or gift card is provided, volunteers may be considered employees, entailing all related employment requirements.
Matching Donations and Fundraising
- Matching Donations: Donors can double their contributions through their employer’s matching gift programs.
- Fundraising Efforts: Volunteering and skill donations are invaluable, offering an alternative way to contribute beyond financial donations.
Note: Charitable organizations are limited in direct gifting and should ensure all actions meet with IRS regulations and the organization’s mission.