casemark/donation-agreement

Donation Agreement

Formalizes a charitable transfer from donor to nonprofit with IRC § 170 compliance and protections for both parties. Target 5–10 pages; complex endowment or real property gifts may run longer.

Prerequisites

Gather before drafting:

• Donor — legal name, address, entity type (individual/corporation/trust), TIN
• Recipient — legal name, address, 501(c)(3) status (public charity vs. private foundation)
• Donation — cash amount or non-cash property description with fair market value
• Appraisal — qualified independent appraisal if non-cash > $5,000
• Restrictions — unrestricted, purpose-restricted, or endowed; conditions (matching funds, naming rights)
• Governing state — for choice of law and venue

Document Structure

1. Parties & Recitals

• Full legal names, addresses, entity types for Donor and Recipient
• Recipient's 501(c)(3) classification (public charity vs. private foundation — affects deduction limits)
• Recitals: charitable intent, mission alignment, donation purpose

2. Description of Donation

| Asset Type | Required Detail | |---|---| | Cash | Amount (numerals + words), currency, schedule (lump sum/installments) | | Real property | Legal description, parcel number, encumbrances, title status | | Personal property | Description, condition, quantity, FMV per appraisal | | Securities | Type, quantity, issuer, transfer method (DTC/certificate) | | IP | Rights transferred, registration numbers | | In-kind | Nature, scope, valuation methodology |

Include delivery method, transfer date, and conditions precedent.

3. Terms and Conditions

• Unrestricted — recipient may use for any exempt purpose
• Restricted — permitted uses, prohibited uses, time period
• Irrevocability — irrevocable upon acceptance (required for deduction)
• Cy pres — if purpose becomes impossible/impractical, funds redirect to substantially similar charitable purpose
• Endowment vs. expendable — whether principal must be maintained
• Conditions — contingencies (matching gifts, naming rights, milestones) and non-fulfillment consequences
• Reporting — required accounting statements or use certifications

4. Tax Acknowledgment & IRS Compliance

| Threshold | Requirement | |---|---| | Any amount | Written acknowledgment: 501(c)(3) status, date, amount/description, "no goods or services" statement | | > $250 | Contemporaneous written acknowledgment before filing — IRC § 170(f)(8) | | Non-cash > $500 | Donor files Form 8283; recipient completes Section B if > $5,000 | | Non-cash > $5,000 | Qualified appraisal required; summary attached to Form 8283 | | Quid pro quo > $75 | Recipient provides good-faith FMV estimate of benefits received |

Include disclaimer: neither party provides tax advice; donor should consult own tax counsel.

5. Representations & Warranties

Donor warrants:

• Full legal title and authority to transfer
• Property free of undisclosed liens, encumbrances, or defects
• Donation does not breach any other agreement
• (Non-cash) Discloses all known defects, environmental issues, or legal problems

Recipient warrants:

• Duly organized, validly existing, in good standing
• Current 501(c)(3) status (attach determination letter or reference EIN)
• Authority under governing documents to accept
• Will use donation per stated restrictions

6. Standard Provisions

• Governing law — [State], without conflict-of-law principles
• Venue — [County/District courts]
• Dispute resolution — optional mediation/arbitration before litigation
• Attorneys' fees — prevailing party recovery (specify or omit)
• Severability, entire agreement, amendment (written, signed by both)

7. Execution

• Signature blocks with printed name, title, date
• Corporate donors: signatory authority (title, board authorization for large gifts)
• Recipient: authorized officer per bylaws
• Notarization: required for real property; recommended above materiality threshold
• Exhibits: property descriptions, appraisals, restriction schedules, IRS determination letter

Pitfalls & Checks

• Verify 501(c)(3) status via IRS Tax Exempt Organization Search before closing
• Pledge vs. gift — pledges are generally unenforceable absent consideration/reliance; document completed or contemporaneous transfers unless expressly structuring an enforceable pledge under state law
• Private foundations — excess business holdings, self-dealing, and expenditure responsibility rules may apply; flag for tax counsel
• Naming rights — address FMV of benefit and impact on deduction (quid pro quo rules)
• AML/OFAC — for large or foreign-sourced donations, include AML representations
• State solicitation laws — many states require recipient registration; note but do not opine