Why it is Vital to Have a Donation Receipt Letter for Tax Purposes

What is a Donation Receipt Letter?

A donor receipt letter or a donor acknowledgment letter is a document that is sent to the donor on behalf of the nonprofit after a donation has been made. It acknowledges and states details about the donor and the gift that was made as well as detailing whether any goods, services, or special privileges were provided to the donor in exchange for the gift.

This receipt is best sent out as soon as the gift has been received. It is vital to the donor so that they are able to claim charitable contributions on their tax returns.

Why Do You Need a Donation Receipt Letter for Tax Purposes?

For nonprofits that are registered as tax-exempt organizations by the IRS, providing donor receipt letters is a legal requirement. The substantiation and disclosure requirements of the IRS state the following stipulations;

• Donors need to have a bank record or recorded form of communication from the charity for any monetary contribution before they can claim a charitable contribution on their income tax returns.
• Donors must obtain a written acknowledgment from the charity to which they are contributing to for any single contribution of $250 or more before the donors can claim a charitable contribution on their income tax returns.
• Charitable organizations are required to provide a written disclosure to a donor who receives goods or services in exchange for a single payment in excess of $75.

Donation Receipt Letter Template

While there are a number of different templates that you can use for donation receipts, we’ve provided you with a very basic template that covers all the necessary information with a simple, clean layout.

You can customize templates easily according to your organization’s tone, style, and requirements. Just make sure that your donation receipt includes the following information.  

• Organization’s name
• Organization’s EIN #
• Organization’s address
• Organization’s phone number
• Donor’s name
• Date of donation
• Date of receipt  
• Type of donation
• Value/amount of donation
• Goods or services rendered in return for a donation
• Signature of recipient

Just because this is a legal requirement doesn’t mean you need to make it cold and distant. You can add some heart to your donation receipt with a personalized acknowledgment or thank you note that makes your donor feel even more appreciated.