When invoicing a charity for donated hours it is important to remember this is considered a monetary donation in the form of services. You are donating your time, which is worth a particular amount of money, thereby making it the same as writing a check to the charity. This all must be cleared with the charity ahead of time and you must be donating time in a profession which you are paid or have gotten paid in the past. You cannot charge for your time for handing out fliers or stuffing envelopes.
Things You Will Need
Word processing or invoicing program
Obtain the charity’s information and verify that they qualify as a non-profit organization under the federal code. The IRS keeps a fairly up-to-date list of charities each year. Be sure to fill out the full contact information of the charity as well as the tax ID number associated with it.
Confirm with the charity they are willing to consider your work a donation. This affects the tax numbers for them as well as for you.
Build a reasonable list of the hours you have worked for the charity. You can choose to tally this over a full tax year, or invoice the charity on a monthly or quarterly basis depending upon how much work you do for them.
Assign a monetary amount per hour worked. You can only bill charities for hours worked if the work is the same as your given profession or is similar to work you currently get paid for. If you design cakes as a side job, paint homes, or do construction work, you can invoice for these things. To ensure the validity you should have copies of other companies you have invoiced and payments you have received for the same type of work.
Total the hours you worked along with the amount you should be paid per hour. This should become the sub-total line on your invoice.
Add another line clearing out all monies owed. Write this up as a donation from yourself. This is where the deduction for taxes comes into play.
Send the invoice to the charity. Whether you deliver it in person or through the mail, retain a copy for yourself and give a copy to the company you did the work for.
Request a return receipt. This is important for your records. The charity needs to acknowledge that your work was a financial donation and send a receipt back, much like a receipt you would get for donating clothes or a car or any other tangible item.
In order to keep from raising red flags, it can be nice to work at a lower rate than normal. This will keep the IRS from thinking you are abusing the write off.
Consider only charging for a portion of the hours worked and not all of them. This shows the spirit of the donation while still being financially beneficial for you.
Some charities might not be willing to let you charge for time spent as the charity is then required to claim that money as part of its donations for the year. Often volunteer hours are something they do not have to add to the overall donation amount for the year.
The statement of “value of time or services” by the IRS as non-deductible is referring to lost wages while working for a charity. As long as you are doing work in your profession for them, such as accountant work, you can charge for your time and then choose to donate it.