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Create the Best Donation Receipt Letter for Tax Purposes

Do you know a donor who wakes up on January 1 ready to do their taxes?

Nonprofit organizations must be ready to deliver the donation receipt letter for tax purposes. This donation receipt letter for tax purposes shouldn’t be boring.

Like other touch points with donors, the acknowledgment letter is a time to make the donor feel special and appreciated. It’s not about your nonprofit organization; it’s about the donor and what they made possible.

Charitable organizations or 501(c)3 organizations are legally obligated to receipt donations, but letters should go beyond IRS requirements.

While there is a legal requirement to send a donation receipt for a cash contribution or credit card donation of $250 or more, the letter is also an opportunity to deepen the relationship with the donor.

In the webinar, Everything You Need to Know About Sending Tax Receipt Letters, the AskGenius team covers the basics of donor acknowledgment letters and shares their best advice for using the letter to personalize donor communication.

With important edits, your nonprofit organization can delight donors by taking the donation receipt letters from bland to impactful.


Letter requirements for tax purposes

Nonprofit organizations must send letters for charitable contributions of $250 or more per the IRS website. The donation receipt can be sent via email or postal mail.

It should contain a statement that says, “no goods or services were promised in exchange for your contribution,” or states if the donor receives goods or services of more than a $75 value.

For instance, if a donor receives a dinner ticket, the written acknowledgment must state this if the value exceeds $75. Many organizations include a description and good faith estimates of what was received.

It is also a good idea to include the employer identification or tax ID number in the letter to let them know you are a qualifying organization to receive donations. This will aid donors who give in part for the tax deductions.

Donor motivations can vary from small businesses that give to a tax-exempt organization for the tax benefit to others giving for intangible religious benefits. The thank you letter should go beyond tax code requirements and help donors feel appreciated.


Beyond Tax Requirements – Personalize the Donation Receipt Letter

Preparing donation receipt letters can feel like a chore, but they don’t have to. The bottom line is nonprofits must change their perspective on writing these and think about how they can create joy for the donor by showing them what they made possible.

Remember the appeal letter your nonprofit wrote that made the donor the hero? Use that same tactic in the acknowledgment letter.

Start by segmenting donors into groups such as recurring donors, major donors, first-time donors, and others. This will help create personalized segments within the acknowledgment letters.

The letter needs to help the donor feel like they made more than a cash donation; they made an impact. Writing these acknowledgments isn’t just about tax law.

Some of the same recommendations in the World’s Greatest Fundraising Letter webinar also apply to the thank you letter.


The donation acknowledgement letter should:

  1. State what the donor gave and make them feel appreciated.
  2. Be heartfelt and informal.
  3. Use indented paragraphs and easy-to-read 13 or 14-point font.
  4. Use underlining and bold fonts to help call out their generosity.
  5. Be 2-4 pages in length.
  6. Use a Johnson box or call-out box to highlight how special they are.
  7. Have a P.S. line; many people will read this first!

Use Automation to Send Donor Acknowledgement Letters

Nonprofit development offices often have limited staff and may feel stressed about promptly getting tax receipts out the door. Sometimes, small development offices only send basic tax statements due to time constraints.

Technology exists to help thank donors in a time-efficient manner. Tools like PowerAutomate or AutomateGenius can help send email notifications when donations are made, create acknowledgment letters that are ready to print, or alert major gift officers when donations from donors in their portfolios are made.

With automation, if you can create a decision tree, the team at AutomateGenius can help customize an automation process.


Learn More

If your team wants to learn more about how automation can help with donation tax receipt letters or other donor communications, sign up for an AutomateGenius demo today. The AutomateGenius team can help you discover ways to optimize the work of your nonprofit’s development team.

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