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Nonprofit How-to: Creating a Donation Receipt

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By Robert Carnes

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Published October 14, 2022 Reading Time: 3 minutes

Donation receipts are how a nonprofit acknowledges financial gifts from its donors. And while donation receipts come in various forms,  each receipt serves the same purpose. Beyond donor recognition and appreciation, these messages also help donors file their annual tax deductions and can help your organization keep good internal records of gifts.

Sending clear and consistent donation receipts is an industry best practice that helps everyone involved with your organization. Plus, streamlining and automating the process of creating and sending these receipts can help your nonprofit grow sustainably.

To help make that more achievable, here’s everything you need to know about nonprofit donation receipts.

When Is a Donation Receipt Required?

There are legitimate tax reasons to send out donation receipts. The specific legal instances  requiring you to send these donation receipts out include the following three basic scenarios:

  • When donations are greater than $250
  • When a donor receives goods or services for donations greater than $75
  • When a donor specifically requests a receipt

It also doesn’t matter if the amount donated is in cash, stocks, or in-kind donations. As long as the value of the gift exceeds $250 (or $75 with an exchange of goods and services), then you must provide a donation receipt.

Failing to send these receipts can cost you a penalty of $10 per donation, up to $5,000 for a single fundraising campaign. However, you can avoid that cost.

While there are times when receipts are a requirement, it’s best practice to use these receipts as often as possible. Following this process keeps your nonprofit more organized and in compliance at all times. Plus, these receipts don’t have to be printed—you can share and store them electronically, as long as you send them to the donor.

How Do I Write a Donation Receipt?

Your donation receipt can either be a mailed letter or an email. And while your donors might prefer one over the other, you should select the one that works best for your organization.

There’s no one right way to send a donation receipt, but there are certainly more effective best practices you can employ. Here are four helpful tips to get you started:

  1. Keep the formatting simple: The goal of donation receipts is straightforward, so your formatting can be, too. That’s not to say it shouldn’t have a professional design, but the priority is on the content. In other words, these receipts can have a more basic design compared to other fundraising letters or emails.
  2. Include your branding: As with every communication from your organization, a donation receipt benefits from showcasing clear branding. Include your logo and other consistent brand elements as you would on your nonprofit’s website or campaigns. Leading with your brand makes the receipt look professional while reminding people of your mission.
  3. Thank donors for their contribution: Take every opportunity you can to show your appreciation to your supporters. You could even use a boilerplate paragraph explaining how their donation will impact others.
  4. Automate sending receipts when possible: A strong nonprofit fundraising software can send electronic receipts instantly to save you time and printing costs. You may still need to send paper receipts for in-person or mailed gifts, but you can also have a streamlined system in place to generate each receipt.

How to Create Tax-Compliant Donation Receipts

Even though nonprofit donation receipts can look different, each one needs to contain a few of the same elements. Here’s a list of what to include in each of your receipts:

  • Your organization’s name
  • Your donor’s name
  • Your recorded date of the donation
  • Your recorded amount of the donation
  • Your organization’s 501(c)(3) status
  • Your acknowledgment no goods/services were exchanged for the donation
  • Your estimate of those goods/services if exchanged

Those are the basics, but you can take your receipts to the next level by adding a few other elements. Here are a few ideas to get you started:

  • Your organization’s EIN number
  • Your contact information: website, phone number, and address
  • Your short message of appreciation
  • Your organizational leader’s signature (CEO or Executive Director)

First, take some time to craft the outline of your donation receipt. Then, use this template to automatically scale the creation of each receipt. You can also (and we highly recommend) revisit this template annually to make updates.

Does the IRS Check Donation Receipts?

In short, yes—the IRS may not check every individual donation receipt, but go ahead and operate as if it does. The IRS may not have the capacity (or need) to audit every nonprofit, but be ready if it decides to check your records.

Otherwise, you can risk disqualification of your tax-exempt status of some donations because of incomplete records. After all, you don’t want to cause any frustration for your donors over an easily correctable mistake.

Start Sending Donation Receipts

Donation receipts are an important part of your nonprofit’s operations and administration as these communications help with donor retention and your record keeping.

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