Pension Protection Act of 2006

One of the non-pension provisions of the Pension Protection Act of 2006 is Section 1217 of the Act.

Effective for tax year 2007, " No deduction shall be allowed … for any contribution of a cash, check, or other monetary gift unless the donor maintains as a record of such contribution a bank record or a written communication from the donee showing the name of the donee organization, the date of the contribution, and the amount of the contribution.’’

For over a decade, we have needed written acknowledgments for donations of $250 or more (which is why I frequently send out charity checks in the amount of $249), but now you need some sort of record for the small stuff. This means that unless you are in a very, very low income bracket, beginning 2007 you should NOT just indiscriminately empty your loose pocket change into the pushke or Salvation Army drum or collection plate or whatever receptacle would otherwise be consistent with your socioreligious biases and tendencies (my own preferences gravitate towards the former, but that is a function of my own socioreligious biases).

This means an added burden for the charitable giver, and also an added burden for every charitable recipient from the big league American Red DoubleCross or your local house of worship. Many donors/donees might not wish to be bothered.

Expect to see:

(1) More checks in pushkes and Salvation Army drums and church collection plates;

(2) More organized and structured giving along the lines of the Combined Federal Campaign, which has its own problems;

(3) A few astute marketing people in some banks who will be touting arrangements such as the one my own household has been using for many years, namely, two checking accounts; one for the ordinary household bills and expenses, and the other, funded with 10% taken off the top of our respective paychecks, exclusively for charitable contributions; and

(4) People who have checking account arrangements such as the one in (3) above will decide that they don't wish to be bothered with the recordkeeping requirements for the small stuff, and accordingly, will limit their charitable contributions to, perhaps, 10 or 15 selected charitable doneees, to the exclusion of others.


The Pension Protection Act will certainly help to reduce prevent the abuses now going on with overreporting of charitable contributions, but it also will serve as a disincentive for the smaller charitable organizations. It will likely do to the small houses of worship what Home Depot has done to the small hardware stores, and what Staples and Office Max have done to the small mom-and-pop stationery stores, and what Borders and Barnes & Noble have done to the small mom-and-pop book stores.

Taxation almost always has some side effect that is at odds with the noble intention of Congress.