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Home Fundraising Donation Receipt: Guide For Tax-Deductible Donations

Donation Receipt: Guide For Tax-Deductible Donations

by Aplos Success Team

It’s important to manage your donations correctly and acknowledge your donors. Here are some answers to common questions about preparing a donation receipt. Let’s get crackin’!

nonprofit-meeting

What Is A Donation Receipt?

A donation receipt is the first step toward showing your donor appreciation for what they’ve done for your organization. It serves as proof that the donor has made a donation to a charitable organization and can be used to receive a tax-deduction by the IRS. This includes a wide range of gifts, including cash, stock, legal advice, or in-kind donations.

The donation receipt can be handwritten, emailed, or sent via postal mail or carrier pigeon, but there are some important IRS guidelines for charitable gifts that it must fulfill, so keep reading.

The receipt can be for a single donation, or you can provide one receipt for multiple donations over a date range. An important place to start is keeping a running log of all donations you receive. Don’t have one started? Here’s a free donation tracking template. Prefer using software instead? Try using donation software.

Why Does Donor Acknowledgment Matter?

  1. You can incur penalties from the IRS if you don’t provide a donation receipt for certain donations.
  2. People donate because they want to further your cause, but they may want the tax break too.
  3. If you are tracking and acknowledging your gifts, it means your financial records will be more accurate, and you are tracking donor history to build stronger donor support in the future.
  4. As Carrie Horton put it, “Donor receipts are the only piece of mail donors expect (and even want) to receive from your organization. So while you have their attention, why not make the most of it with content that will inspire constituents to engage further?” For more, read Carrie’s full article, “How to Create Nonprofit Receipts That Increase Donor Engagement.”

When To Write Donation Receipts

donor-receipt-requirements

If a donation value exceeds $250, you must provide a donation receipt. You must also provide one if the donor receives goods or services for a donation greater than $75, or if the donor requested a receipt. However, nonprofits should acknowledge all gifts, no matter what size. After all, it’s a way to nurture their donor base and retain donors.

When Are Donation Receipts Due?

donation-statement-due-date

Donation statements must be sent by January 31 of the year following the gift so donors have time to complete their tax returns, but it is considered a best practice to send an initial donation receipt within 48 hours of the donation being received. People want to know you’re managing their money properly. A timely response can let the supporter know you appreciate their donation and it’s in competent hands. 

What Is An Example Of A Donation Receipt?

donation-receipt-template

Donation receipts can take a few different forms, but here are a few things the IRS requires:

  1. Name of the charity and name of the donor
  2. Date of the donation
  3. Detailed description of the property donated
  4. Amount of the donation, but only if cash was received
  5. A statement regarding whether or not any goods or services were provided in exchange for the donation
  6. If applicable, the value of the goods or services provided by the charity to the donor and a statement indicating the tax deduction may be limited

Donation Acknowledgment Letter

A common form of a donation receipt is an acknowledgment letter that includes the IRS-required fields, but also specifically thanks the donor and informs them of the impact of their gift. Best practices recommend a more personal acknowledgment letter, followed by a receipt that includes the required elements. Check out some sample donation acknowledgment letters.

Donation Receipt Software

If you want to build trust with your supporters without investing a ton of time, consider using donation software for nonprofits. It can automatically track donations made online to your organization, and automate the receipt process for you. Additionally, it may include other handy features like donor management and fund accounting.

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7 comments

Shandi Hill November 19, 2019 - 8:17 am

I would like to receive more information about what you do and how it could my nonprofit

Reply
Clay Harmon November 19, 2019 - 9:36 am

Hi Shandi,

If you’d like to learn more about what Aplos does and how it can help your nonprofit, check out this page, which goes over the features we offer: https://www.aplos.com/nonprofit-software. Our software helps with your accounting, nonprofit management, and much more. I hope this helps!

Clay

Reply
Cph Media March 9, 2020 - 10:45 pm

designated giving to a specific ministry with in the church If specify that I want my monetary donation to go to a specific ministry within the church. Is it tax deductible?

Reply
Clay Harmon March 12, 2020 - 2:26 pm

Hi there,

For this type of question, we recommend that you contact your CPA. I’m sorry we couldn’t be more helpful.

All the best,
Clay

Reply
Worries April 22, 2020 - 1:38 pm

Our church was donated land and the donor wants a receipt for tax deduction. Is this legal and if so what must the receipt contain?

Reply
Clay Harmon April 22, 2020 - 1:45 pm

Hi there,

We recommend that you contact your CPA for a question like this. I’m sorry we couldn’t be of more help.

All the best,
Clay

Reply
Kathy F October 27, 2021 - 4:54 am

Excellent resource document. Thank you!

Reply

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