Nonprofit managers know the power of a gracious thank you when it comes to acknowledging donations. It’s part of donor management—ensuring that donors feel valued and appreciated.
But accompanying a lovely thank-you note should be something more ordinary: a tax donation receipt. A receipt for donation isn’t just proof that the donor gave money to your organization, but a document that can be used by donors to take a tax write-off. Here’s what your donation thank you and receipt should include.
Tax Deductions for Nonprofit Donations
Tax deductions may be claimed for those who donate goods or money to a charitable organization. Charitable organizations should be recognized as a 501 (c) (3) organization by the IRS.
A donation means that the money or goods given to the organization are done so without anything given in return. If you paid for a t-shirt at a museum gift shop, for example, that would not count as a charitable donation because you received the t-shirt in return. If, however, you donated $25 to the museum without receiving an item in return, it may be considered a charitable donation.
Thank-You Letters and Tax Documentation
Thank-you letters may seem old-fashioned, but donors do appreciate the acknowledgement of their generosity. In addition to a personalized thank-you letter, your organization should also include a receipt for the donation which the donor can use for charitable tax deductions.
Such receipts should include specific information, such as:
- The donor’s name, address, and date the donation was received
- The organization’s legal name
- The organization’s tax status
- The organization’s EIR
- Total dollar amount given
- If anything other than money was given, a description of the item donated
You should also include a note stating whether or not a gift was given as a thank you. A simple description is fine— “We hope you enjoy this small bookmark as a token of our gratitude” is sufficient. Remember, they are not paying for the gift, but you should acknowledge it in the letter.
Lastly, be sure to include a reminder to the donor to keep the letter and receipt as proof of their donation. Keep a copy in your files, too. You never know when you might get a call from a donor looking for it!
MIP Fund Accounting Makes Donation Receipts Easy
If your nonprofit is running MIP Fund Accounting software, you have the ability to print donation receipts right from your system. It’s part of the general ledger module, and it’s included in every MIP package.
You can access it immediately or, if you’re a current client and can’t quite figure it out, give Vicki at call at Welter Consulting, 206-605-3113. And, if you’re not currently a client but you’re interested in finding out more about how nonprofit accounting software can make your organization run smoothly, we welcome your call too.
Other Ideas to Thank Donors
One of the best ways to thank donors is to do so personally. A handwritten letter, a heartfelt typed letter, and of course, that donation receipt is much appreciated.
Other ways to thank your donors include:
- Mentions on social media
- Mentions in printed newsletters
- Share a story or picture of how the donation was used
- Create a short “thank you” video
- Offer a small gift or inexpensive token of appreciation
A gracious thank you goes a long way toward enhancing the donor experience. And, along with a thank you, be sure to include your donor’s receipt so they can take advantage of the tax deduction.
Welter Consulting
Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 fo
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