It’s important to manage your donations correctly and acknowledge your donors. Read further for answers to common questions about preparing a donation receipt. So let’s get crackin’!
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 contribution 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.
It 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 that you receive. Don’t have one started? Here’s a free donation tracking template.
Why Does Donor Acknowledgment Matter?
- You can incur penalties from the IRS if you don’t provide a donation receipt for certain donations.
- People donate because they want to further your cause, but they may want the tax break too.
- If you are tracking and acknowledge 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.
- As Carrie Horton put it, “donor receipts are the only piece of mail that 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?”
You can read Carrie’s full article in our Aplos Academy, here: How to Create Nonprofit Receipts That Increase Donor Engagement.
When To Write Donation Receipts?
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. It’s a way to nurture their donor base and retain donors, after all.
When Are Donation Receipts Due?
Donation statements must be sent by January 31 of the following year 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 that you’re managing their money properly. A timely response can let the supporter know you appreciate their donation and that it’s in competent hands.
What Is An Example Of A Donation Receipt?
The receipt can take a few different forms, but here are a few things that the IRS requires on donation receipts.
- Name of the charity and name of the donor.
- Date of the contribution.
- Detailed description of the property donated.
- Amount of the contribution, but only if cash was received.
- A statement regarding whether or not any goods or services were provided in exchange for the contribution.
- 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 Acknowledgement 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. You can see some sample donation acknowledgment letters in Aplos Academy.
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.