What Counts Hotline Featured Question
Question:
Our hospital requires requests for cash donations and grants to be in writing. The requests must detail how the requesting organization intends to use the funds and the community health need being addressed. Can the written request count as our hospital's restricted donation letter?
Recommendation:
The IRS Schedule H instructions define "'Cash and in-kind contributions' means contributions made by the organization to health care organizations and other community groups restricted, in writing, to one or more of the community benefit activities described in the table on Part I, line 7 (and the related worksheets and instructions)."
The organization's request for funding that you receive does not satisfy the requirements. All cash contributions, regardless of size, must be restricted in writing by the hospital in accordance with IRS instructions to qualify as reportable community benefit on the Schedule H. We recommend that you work with your legal team to develop a restricted donation letter. Keep in mind that each restricted donation letter will need to be specific to the donation. We recommend that you keep documentation for each contribution, including the request, restricted donation letter, and how it meets the requirements of a qualifying community benefit activity. » Read the full recommendation
Resources:
What Counts Q&A: Cash and In-Kind Contributions
Community Benefit Accounting Resources
Restricted Donation Sample Letter (Lyon Software)
See CHA's What Counts Q&A Library for more information on this and other topics.
Note: The information provided above does not constitute legal or tax advice. The information is provided for informational/educational purposes only. Please consult with counsel regarding your organization's particular circumstances.
