Guide to Donation Receipts

What is the difference between a donor receipt, an acknowledgement, a tax receipt, and a thank you letter? They are often used interchangeably, but here’s how I sort them out.

An acknowledgement is any correspondence or document that states a gift (a donation) was given to a nonprofit organization. This document includes the amount of the gift or a brief description of a non-cash contribution, the date, the name of the organization, and the name of the donor, and a statement that no goods or services were provided for the donation. This bare-bones document is also called a tax receipt or a donor receipt.

The IRS Publication 1771, Charitable Contributions- Substantiation and Disclosure Requirements, outlines the federal tax law requirements for receipts from charities that receive tax-deductible charitable contributions and for donors who make contributions.

For example, donors must have a bank record or written communication from a charity for any monetary contribution before they can claim a charitable contribution of $250 or more on their federal income tax return. It is the donor’s responsibility to obtain a written acknowledgement of their gift from the charity.

A thank you letter is a personal expression of gratitude. At the same time, a thank you letter can also include the elements mentioned above. You may want to implement different letter templates for different levels of donations. For example, major gift donors may receive a thank you letter from the Executive Director and mid-range donors may receive a different letter from the Development Director. A best practice is to rewrite your letters periodically so that a donor does not receive the same message each time they donate.

Another great resource is the Donor Relations Professionals Association for best practices and other guidelines.

My best advice is to consistently let your donors know you are grateful for their support. You want to cover your bases with the IRS requirements but don’t stop there.

Cheers,

Michelle Crim, CFRE

Dynamic Development Strategies can help. We offer coaching, grant writing, and fundraising services for our nonprofit clients. We specialize in small to mid-size organizations because we understand your challenges. Please contact us for more information.

https://www.dynamicdevelopmentstrategies.com/