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.
(November 2024)
Question: If we donate two first aid kits to a boy scout troop or donated other items, would we need to provide a letter restricting the use for those the same as you would for a cash donation?
Recommendation: We recommend maintaining records of in-kind donations including the source of the requests, financial value and the community benefit purpose of the in-kind donation.
(November 2024)
Question: If making a donation to an organization whose entire mission is health-related community benefit - like American Cancer Society, is it really necessary to have the written letter restricting donation to a community benefit?
Recommendation: The IRS Schedule H instructions require that donations be restricted in writing to one or more community benefit activities. This would include contributions to organizations with missions to provide community benefit.
(November 2024)