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§ 22.2 QUID PRO QUO CONTRIBUTION RULES• Either of the following is the case:The fair market value of all of the benefits received in connection withthe payment is not more than the lesser of 2 percent of the payment or$50 (indexed for inflation 20 ), orThe payment is $25 (indexed for inflation 21 ) or more and the only benefitsreceived in connection with the payment are token items bearingthe organization’s name or logo.For these purposes, token items include items such as bookmarks, calendars,keychains, mugs, posters, and T-shirts. Also, the costs of all of the benefitsreceived by a donor must, in the aggregate, be within the statutory limits establishedfor low-cost articles. That term generally describes an article with a costnot in excess of $5 (indexed for inflation) 22 that is distributed incidental to acharitable solicitation. 23With respect to the first of these two requirements, when a charitable organizationprovides only insubstantial benefits in return for a payment, disclosure ofthe fair market value of the benefits is not required. Fundraising materialsshould include a statement to this effect:Under Internal Revenue Service guidelines, the estimated value of [the benefitsreceived] is not substantial; therefore, the full amount of your payment isa deductible contribution.If it is impractical to state in every solicitation how much of a payment isdeductible, the charitable organization can, under these guidelines, seek a rulingfrom the IRS concerning an alternative procedure. This circumstance can arise,for example, in connection with the offering of a number of premiums in an onairfundraising announcement by an educational organization.Resolving what was a difficult problem for many organizations, theseguidelines state that newsletters or program guides (other than commercialqualitypublications) are treated as not having measurable value or cost if theirprimary purpose is to inform members about the activities of an organizationand if they are not available to nonmembers by paid subscription or throughnewsstand sales.The charitable community was unable to achieve a level of compliance withthe general IRS disclosure guidelines that satisfied the IRS and Congress. Twoimportant items of legislation were the consequence. 24§22.2 QUID PRO QUO CONTRIBUTION RULESThe federal tax law imposes certain disclosure requirements on charitable organizationsthat receive quid pro quo contributions. A quid pro quo contribution is a20 See Appendix G.21 See Appendix H.22 See Appendix I.23 IRC § 513(h)(2).24 See §§ 21.1(b) and 22.2. 609