Donation Receipts: #1 Guide for Tax-Deductible Donations

If you want your nonprofit to float like a butterfly, it’s important to manage your donations correctly and acknowledge your donors. Here are answers to the most common questions about preparing donation receipts and resources to get started. So let’s get crackin’!

What is a donation receipt?

A donation receipt is the first step toward showing your donor that you appreciate their donation and 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.

Why does donor acknowledgment matter?

  1. Required by the IRS: A donation receipt is required by the IRS for certain donations and there can be a penalty if it isn’t fulfilled.
  2. Tax Deductions: We’d all like to think that each and every person who donates to our organizations is passionately driven to further your cause, but that doesn’t mean they aren’t also hoping for an additional tax break.
  3. Better record keeping: 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.
  4. Enhance engagement with your donor: 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 compelling content that will inspire constituents to get even more engaged with your cause?”

You can read Carrie’s full article in our Aplos Academy, here: How to Create Nonprofit Receipts That Increase Donor Engagement.

When are Donation Receipts Required?

Donation receipts are required when the donation value exceeds $250, the donor received goods or services in exchange for a single donation greater than $75, or the donor requested a donation receipt. However, it is beneficial for nonprofits to acknowledge all gifts, no matter what size as a way to nurture their donor base and retain donors.

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 their money is being managed properly, and a timely response can let the supporter know that their donation is both appreciated and 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.

  1. Name of the charity and name of the donor.
  2. Date of the contribution.
  3. Detailed description of the property donated.
  4. Amount of the contribution, but only if cash was received.
  5. A statement regarding whether or not any goods or services were provided in exchange for the contribution.
  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 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 is a more personal acknowledgment letter, followed by a donation receipt that includes the required elements. You can see some sample donation acknowledgment letters in Aplos Academy, or check out this webinar for an in-depth look at how to thank your donors.

In-Kind Donation Receipt Form
One is a donation receipt that is in exchange for an in-kind gift, which is one frequently used by organizations like Goodwill or Salvation Army: Goodwill Donation Receipt.

These receipts can be filled out by the donor and they are responsible for entering the value of the donation. The Salvation Army Donation Value Guide is a great resource for helping people determine the appropriate value for a donated gift.

The IRS is incredibly strict on individuals who claim charitable contributions on their taxes. While this may not seem like a big deal for the organization, it is. If a donation receipt isn’t filled out properly and the donor is denied that deduction on their personal taxes, it may discourage them from making future contributions. If your donors want to make sure they are doing it correctly, encourage them to check out this IRS resource for Eight Tips for Deducting Charitable Donations.

How Can I Make Donation Receipts?

If you want to build trust with your supporters, Aplos can help you create personalized donation receipts that you can either print or email. Plus, donations made online to your organization through Aplos are tracked automatically. Check out this demo of Aplos Donor Management.

If you just need a quick donation receipt that you can fill out manually, here is a link to a Microsoft Office donation receipt template.

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Joshua is bit of a Swiss army knife around Aplos. More like one of those generic, off-brand multitools that really only has two or three tools that are actually of use, but darn if they're not the best at what they do. So when he's not writing code for the company website or giving a copyedit to the eblasts, he's home working on his novel, spending time with his wife and daughters, or out cycling up by the Millerton Lake. (What's that? My bio isn't long enough? Ok, I got this...) He also likes cheese, prefers Pixel to iPhone, hates click-bate article titles, is a strong believer in the Oxford Comma, thinks Rouge One was better than The Force Awakens, and The Last Jedi was better than both. (Boom, nailed it.)

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