Charitable Contribution Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Charitable Contribution, written in plain English, along with examples of how it is used.
What is Charitable Contribution?
In the law of taxation it refers to any contribution in cash or cheque to a non profit organisation which has been qualified to receive charity. Such organisation can be religious, artistic, acedamic, scientific, charity etc. The amounted contributed is lowered from the income thereby less tax is paid.
History and Meaning of Charitable Contribution
A charitable contribution is a donation made to a non-profit organization or charity that is tax-deductible for the donor. The concept of giving to others in need has been present in societies throughout history, but the modern charitable contribution as we know it today emerged in the early 20th century with the growth of the non-profit sector. In the United States, charitable contributions began to be regulated by the government in 1917, when tax deductions were first established for charitable donations. Today, charitable contributions play a vital role in supporting organizations that work towards improving communities, helping those in need, promoting social justice, and advancing various humanitarian causes.
Examples of Charitable Contribution
- John donated $500 to a local food bank, which is a qualified charitable organization. He can claim this amount as a deduction on his income tax return, thereby lowering the amount of taxes he owes.
- Mary gave a used car to a charity which auctions it off to a needy family. Mary can claim the fair market value of the car as a charitable contribution on her taxes.
- An art collector, Henry, donates a painting to a publicly supported museum. Henry may take a charitable deduction for the contribution based on the appraised value of the painting, as long as he has owned it for more than one year.
Legal Terms Similar to Charitable Contribution
- Donor advised fund: a charitable giving vehicle administered by a public charity, allowing individuals or organizations to make donations to the fund and take an immediate tax deduction, while also recommending grants from the fund to their preferred charities over time.
- Charitable remainder trust: a tax-exempt irrevocable trust designed to reduce the taxable income of individuals by first distributing income to the beneficiaries of the trust for a certain period, and then donating the remainder of the trust assets to a designated charity.
- Non-profit organization: an organization that uses its surplus revenues to further the purpose or mission of the organization, rather than distributing it as profit or dividends to the members or shareholders.