Our Church conducts a “Sunday school” for children on Saturdays for 4 hours including lunch. It costs $150 a year per child even though the teachers are not paid. As treasurer, many parents ask me if I can give them a donation receipt for the full amount of the Sunday school payment. It is my understanding that because the parents are receiving benefits from the teaching I can't give a receipt for a charitable contribution. Can you please explain this because I may be wrong?
You are not wrong. The courts have regularly denied charitable contribution deductions for private school tuition payments. Even though most of the cases involved providing a full curriculum satisfactory for state education law requirements, the 9th Circuit Court of Appeals has also denied a partial deduction to a parent of a religious school student who claimed that the religious portion of the education was an “intangible religious benefit.” The Court denied the deduction on two grounds: the parent did not show that the payment exceeded the value of the education, and did not show any intent to make a gift in making the payment. (See Nonprofit Issues®, Tax Matters, 12/16/08.)
It sounds like you would be in the same position if one of your parents claimed a charitable contribution deduction. Even if you did provide a receipt, since the parents received the educational services (and lunches) in consideration of the payment, you would have to value the goods and services they received in return. I hope you wouldn’t say they were worthless.
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