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While we recommend sending donation acknowledgment letters to all of your donors, you are legally obligated to send documentation to donors who have given a gift of $250 or more. The IRS requires nonprofit organizations to provide a formal acknowledgment letter to these donors for tax purposes.
You should also be able to segment your donors into different lists based on different actions the donor has taken. For example, you could set up an automatic report that pulls a list of donors who have given more than $250 to your nonprofit. You could then pass that list along to a board member to make personal phone calls to acknowledge the donors’ gifts.
According to the IRS, you can choose to send an acknowledgment letter for every contribution or you can send one acknowledgement for all of the donor’s contributions in one year. It’s up to you which method you choose.
We recommend sending a year-end acknowledgement letter to your donors even if you sent separate ones for each of their donations. Why? It’s the time your donors will be collecting the documents they need to file their taxes. If they made 3 or 4 contributions throughout the year, they may have a hard time shuffling through their old mail and email to find them. That means they may reach out to you and request a complete summary of their charitable contributions for the year.
It will save time for both you and your donor to go ahead and plan to send out a year-end acknowledgment letter or tax summary letter to all your donors. It’s even better if your nonprofit CRM allows your donors to do this on-demand. For example, with Kindful’s donor accounts, donors can download a PDF copy of contributions from the year in one click.
Most of your donors will file their taxes before the deadline, some as early as February. That’s why most organizations are proactive and send their acknowledgments before January 31. You don’t want an inbox full of requests for donor acknowledgments from February through April. Of course, if your donors have the ability to download tax summaries on demand, you’re less likely to encounter this problem.
For example, with Kindful you can automatically trigger emails or mailings to go out when a certain action occurs—like a donor making a gift. Or, if you want to send a special acknowledgment to your major givers or recurring givers, you can set a task to follow up with a call or visit.
These automated features ensure that your organization is compliant with the IRS, help establish good communication with your donors, and remind you to do the tasks that strengthen your donor relationships.
All donors deserve to be recognized, no matter the size of their gift. Use donor acknowledgment letters to show your gratitude and provide donors with important information they’ll need come tax season.
Nonprofit work is a two-way street. You rely on your donors, supporters, and volunteers to reinforce the valuable work you do, and they rely on your knowledge and skillset to make the world a better place. Maintaining this relationship between donors and nonprofits is essential, and one way to make sure your donors feel valued is through donation acknowledgment letters.
Below, we suggest some best practices for writing your donation acknowledgment letters and provide you with samples so you can be confident your donors feel appreciated. Remember to pay attention to the items for donors who have given a gift of $250 or more.
There is no rule on how to format your charitable contribution acknowledgment letters. However, the most common types are emails, letters, and postcards. Some nonprofits use the same format for all acknowledgments; others distinguish certain formats for specific donation types or amounts.
For example, if a donor gives a particularly large gift, you may want to have a senior member of your organization send that donor a handwritten acknowledgment so you can go the extra mile to show how much that donation meant to the organization. Alternatively, if a donor signs up for a regular recurring donation, we recommend using a template that tells the ongoing story of your nonprofit so the donor feels connected to your work and continues to partner with you.
Below, we’ve included some tips on how to automate this process using your nonprofit CRM. This will allow you to put similar donors into acknowledgment lists and send automated responses based on particular actions. This speeds up the acknowledgment letter process and ensures you never miss a chance to connect with your donors.
Another important reason to automate these acknowledgements is that you don’t want to leave your donors wondering if you received the donation. Send them as soon as possible—ideally within 24 hours of a donation being made.
Thank you for your generous donation to the Sea Turtle Project! Donors like you are vital to the continued success of our mission to protect sea turtles from extinction, and we are grateful for your support.
Thank you again for your dedication to conserving the sea turtles’ natural habitat and for helping us prevent the danger of their extinction. We’re excited to continue partnering with you to save the turtles!
It’s important that your donation acknowledgment preheader briefly alludes to what the message is about. Especially if you’re sending an email acknowledgment, make sure the subject contains words like “Thank you for your donation” or “Donation acknowledgment.” This grabs your donor’s attention and ensures they don’t accidentally overlook your acknowledgment.
Dear Jemar,Thank you for your generous donation to the Sea Turtle Project! Donors like you are vital to the continued success of our mission to protect sea turtles from extinction, and we are grateful for your support.
On January 15, 2021, you made a contribution of $275.00 to the Sea Turtle Project. Your gift was processed as a credit card transaction and made in support of our mission.As a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code (EIN #111-111-1111), every donation makes an impact, and we are so thankful for your support.
On January 15, 2021, you made a contribution of a 2020 Mongoose electric scooter to the Sea Turtle Project. Your gift was received as an in-kind donation and in support of our mission.As a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code (EIN #111-111-1111), every donation makes an impact, and we are so thankful for your support.
If goods or services were processed in exchange for the charitable contribution, make sure you note these with the fair-market value. According to the IRS, goods or services include both tangible and intangible gifts like “cash, property, services, benefits, or privileges.” There are some exceptions, such as insubstantial gifts like t-shirts or stickers. By including this information, you’re providing the donor with the exact donation amount exceeding the contributed goods or services for their tax records.
In exchange for this contribution, you received a “thank you” basket valued at $50.00. Your gift is tax-deductible to the extent that this exceeds the value of the “thank you” basket. Please retain this letter for your tax records.
Now that your donor has all the information they need, use your closing to thank them again, update them on your organization’s progress, or introduce more opportunities to give. This should act as a friendly sign-off and make your donors feel like part of your team and shareholders in your mission. This will be your donor’s last impression of your nonprofit until further communication. Make sure to end with a touch of empathy so they know you care about their continued support.
Thank you again for your dedication to conserving the sea turtles’ natural habitat and for helping us prevent the danger of their extinction. We’re excited to continue partnering with you to save the turtles!Sincerely,
Your Friends at the Sea Turtle Project
After you’ve done the work to write an acknowledgment letter that fulfills IRS requirements and makes your donors feel valued, let Kindful make sure you never miss a chance to thank your donors. Using your nonprofit CRM to automate your acknowledgments means your nonprofit can connect with your donors and continue pursuing your mission simultaneously.
Additionally, Kindful allows you to customize your donation acknowledgment and automatically populates your contact information where you specify. This speeds up the donation acknowledgment process and ensures every acknowledgment has that personal touch.
Schedule a live demo with our team, and we’ll show you how easy it is to create and automate reports, utilize online and offline fundraising tools, quickly integrate and access all your data, and ultimately create more time to engage your donors.
Donation receipts are a fundamental part of the giving process. While their content is pretty straightforward, when and how you send them can mean the difference between happy donors and tax season headaches.
Your organization can use donation receipts to aid in your accounting processes and to track a donor’s history with your organization. While it is only legally required to send a donation receipt for gifts above $250, it’s best to send an individual receipt for every donation.
The final point is not required, but it’s recommended by most. In order for a donation to remain tax-deductible, no goods or services can be exchanged for the donation amount. For example, event tickets, purchases from your online store, and raffle ticket purchases are not tax-deductible.
Taxes are complicated enough, so in order to make filing easier for your donors, it’s important to keep receipts simple and easy to understand. Here are four do’s and don’ts that will help you set up better donation receipts.
Your donors should be able to quickly scan the receipt for the information they need — their donation amount, your organization’s federal tax ID, and the date of the donation. To make this information easy to find, opt for a simple email with minimal design elements, if any.
According to NonprofitHub, first-time donors who get a personalized thank you within 48 hours of their gift are 4 times more likely to give a 2nd gift. While that may seem like a lot of work, this can also easily be automated via software. Simply use mail merge tags to keep your personal touch.
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When it comes to fundraising, a good place to start is at the very beginning—and that means knowing how to ask for donations. Donations are what makes the nonprofit world go round, raising awareness and funds for your cause and letting you make a bigger impact. Maybe you’re a fundraising expert who’s planned swoon-worthy black-tie galas start to finish, or perhaps you have grand fundraising aspirations but have only dabbled in the fine art of Kickstarter campaigns. Either way, we can help you take things up a notch as we dive into the nitty-gritty details of asking for a donation. Buckle up; it’s gonna be a wild (and highly effective) ride.
There are many ways to ask for donations, depending on which channel you’re using, who you’re asking, when you’re asking, and whether Mercury is in retrograde. But there are also some basic steps to keep in mind to ease the asking for donations journey. If you want to get on the donation bandwagon but don’t know where to begin, here’s a high-level, step-by-step overview of how to ask for a donation.
There are current donors and prospective donors. There are first-time donors and one-time donors and major donors and minor donors. Before you do anything else, figure out who you want to ask. For a new nonprofit, that will be “everyone we’ve ever blinked at.” For an established one, it will be an audience segment. (And if you haven’t segmented out your donors yet, now’s a good time to get on that.)
Multi-channel fundraising is the best, so as a jumping-off point, decide how you’re going to coordinate your asks across channels and where you’re going to focus your efforts. Keeping your audience in mind, choose your channel(s)—whether it’s email, phone, text, social media, or carrier pigeon.
The most successful donation requests are authentic. Ground every request in your nonprofit’s unique story, letting would-be donors know how they can play a vital role in it. If you can include real-life photos, it’ll up the impact.
Connect with your donors by customizing and personalizing your message. Nothing makes folks click “delete” faster than an email that starts with, “Hey, you!” or asks them to give when they gave one week ago. The more you can speak to each donor as a person instead of a number, the more likely they are to make a donation.
You’ve made the ask—don’t make people search for a “donate” button. Ensure your donation process takes as little time, and as few clicks, as possible. Send them straight to your donation page, which should be informative, intuitive, and branded.
You did it! But the work’s not over. Assuming your donation request was impossible to resist, you've now got some donations on your hands. Be sure to say “thank you” within 48 hours (24 is even better, but hey, we’ve all got things to do) so your new friends feel appreciated right away. It can be a thank-you email or a thank-you phone call—the important part is the thanks.
Now that you have some donors, keep the relationships going and the donations coming. Follow up by updating them on your nonprofit’s work, offering other ways to get involved, and, of course, saying thank you a few more times.
While we can’t write your fundraising email for you, we can provide some additional guidance on how to work some fundraising magic. The fact is that your words have an impact on your outcomes. Read on for our tips on the right wording to ask for donations. Then, it’s off to the typographical races!
Giving now is better than giving later, so make sure your language reflects that. By creating a sense of urgency, potential donors won’t put off their donations. Use words like “now” and “today,” and then explain why giving immediately is so important.
No, we’re not suggesting that you send an email with the subject line, “Money, please!” But it’s important to be clear about why you’re asking donors to open their hearts and wallets as well as how they can help. Have a CTA right smack in the middle of that fundraising email; include a pre-stamped envelope with that direct mail appeal.
How many emails do you get each day? Yeah, us, too. To stand out from the crowd and ensure folks actually read your perfectly crafted missive, your subject line needs to sparkle. Keep it short, direct, and clear. If you can be creative, go for it. And please, for the love of all that is English class, don’t use all caps or more than one exclamation point.
You’re doing hard work, but if there’s no light at the end of the tunnel, no one will want to pitch in. Donors need to know that there’s hope, so even in the darkest of times, highlight your organization's mission and be that shining light.
Gratitude is where it’s at when it comes to asking for a donation. Even if someone hasn’t given, be grateful that they’re reading your email and considering a gift. No one wants to feel that they’re being taken for granted.
Just like using “you,” using action verbs lets your donors be more than bystanders tossing change at the problem. Sure, they can “donate,” but they can also “fight for the cause,” “solve the problem,” and “make an impact.”
Every fundraising strategy worth its salt (what a weird expression) knows that numbers equal impact, so incorporate some data into your donation requests. How many baby chinchillas will that $100 donation help? Whoa, that’s a lot. I know where my tax return’s going.
Dear [Donor Name], Today, I’m writing to ask you to support [cause]. By donating just [amount], you can [specific impact]. To donate, [specific action]. Thank you for joining [cause’s] efforts during this [adjective] time—It's supporters like you that help us change the world every day.
Okay, we probably could have supplied that last adjective for you, but it’s a bit more fun when you think of it like Mad Libs, right? Now that we’ve provided a bare-bones template for asking for donations, here’s an example with a bit more tofu on the bones. (Some of us are vegetarians here.) We’ve included more generic wording to spark inspiration; remember to dig into the details and craft donation requests that speak to your donor base.
When you partner with [nonprofit], you effect change in our community and ensure our success in the future. [Personalize the ask as much as possible.] Thank you for caring; thank you for supporting [clients]!
At Funraise, we encourage you to get creative and have fun with your communications, so don’t be scared to step outside the box. After all, you want to keep things to the point but make a big impression. Of course, a donation request email will be different from a text will be different from a social media post, and asking an individual is very different from asking a business. Now, we’ll get into those details.
Because texts are so short, make sure your donation ask is specific (and also compelling and witty, of course). Show donors that you have a rock-solid reason for making them take their precious mobile device out of their pocket. Maybe it’s your annual appeal or maybe it’s a very special project.
No one likes getting out of a movie to find 20 increasingly frantic texts in a row from the same person. (“Joel, were you kidnapped? Pls write back.”) Strike a balance between over- and under-asking by communicating regularly and balancing urgency and information.
Yes, you’re looking for donations, but all donations are built on donor relationships. Don’t only write to ask for money or your texts will soon be blocked. Send success stories to give supporters warm-and-fuzzy feelings. Let them know if you’re holding a fun event. And, of course, pipe up if their credit card is expiring.
Just because a text is short doesn’t mean your words matter less. In fact, each word matters more when you have to be brief. Keep your audience in mind and don’t be overly pushy or overly casual. You know your nonprofit organization and you know your donors, so you do you.
Don’t let your text asks spill into five different messages, popping up one after the other. If you write 160 characters or less, it’s way more likely your donation ask will actually be read. And that means it’s fine to send details separately. Feel free to follow up with an email donation appeal that provides additional information.
To get donations on social media, post regularly, use real images, and add relevant hashtags. For direct asks, link to your campaign site and add a donation button. Birthday fundraisers are popular. And don’t just ask for money—use social media to update, inform, and engage your supporters.
Many of us have a love-hate relationship with social media. We love the kittens in tutus and the renovated kitchens; we hate the FOMO and the constant barrage of information (and misinformation). But the siren call of social media platforms always lures us back, and that’s why you need to know how to ask for donations online. Next, we’ll cover how to write social media donation posts for all your favorite channels.
If you’re asking for donations on Facebook, you can link to your donation page through a post, ask your supporters to hold Facebook Fundraisers, or encourage direct donations on your nonprofit’s Facebook page. All of these options make it easy for donors to give to your cause in one click.
Social media is all about community (and ads for same-day cookie delivery. Wait, is that just us?), so tap into said community by having supporters collect donations on your behalf. They can post birthday or anniversary fundraisers to their profiles, share it with friends and family members, and even pledge to match every dollar raised.
You can also add a donate button to any post as a subtle (or not-so-subtle) nudge. For example, if you’re running a big campaign and providing periodic updates on progress toward your fundraising goal, a donate button on each post just might put you over the edge.
If you’re asking for donations on Instagram, you can add a button to your profile, post on Instagram stories, or go live with your donation request. You can also get your community involved by having them start an Instagram fundraiser for your cause as a post or 24-hour story.
Instagram is Facebook’s sleeker, cooler cousin, and more and more users are switching their social media allegiance these days. (Yeah, we know they’re all Meta now). If you want to make some Insta-solicitations, try the fundraising tools below.
Take your fundraising show on the road with a live donation drive. Be sure to build momentum through regular stories and posts, then start a live video for some face-to-face fundraising (or selfie-to-selfie fundraising) fun.
If you’re a nonprofit plugged into the metaverse, you’re ahead of the fundraising curve. In the future, you’ll be able to hold virtual events and advertise on virtual billboards. For now, stay on top of new developments, form relationships, and help shape a more inclusive and altruistic cyber-world.
And if you’re not so sure about this whole metaverse thing (and wondering if it’s actually the matrix)? We get it, and we’re definitely not the experts. But a lot of folks think it’s the next frontier of cyberspace—and that means nonprofits should get in early. The metaverse is made up of multiple digital worlds and is an amalgamation of all sorts of techy treats, from VR and AR to NFTs and crypto. It’s kinda an amorphous blob right now, but in a way, that’s exciting. The future is now, fundraisers, so get those avatars ready and make it great.
When you research nonprofits and the metaverse, there’s not a heck of a lot there. But these are the earliest of days, friend. If you’re wondering how to ask for a donation in the metaverse, start by getting to know it. If you can’t afford the hardware, don’t sweat it. Read some articles and watch some YouTube videos.
We all know that the internet can be kinda-sorta toxic, and there are already hints of sexism, racism, xenophobia, and all that incredibly unpleasant jazz on the metaverse. But it’s still in its nascency, so you have the chance to actually have an impact and change it! Advocate, infiltrate, and fight the good fight so that this next iteration of the internet is more equitable, kinder, and better.
With augmented reality (AR), you can give supporters around the world a live tour of the school they’ve helped fund. Would-be fur-parents can “hold” their new dog. You can get cryptocurrency donations and hold an NFT auction as a fundraising event. The metaverse holds a myriad of possibilities—for now, keep your eyes open, and explore this new space.
Maximize your reach by asking for donations across multiple channels, including social media platforms, fundraising letters, fundraising emails, text engagement, and phone calls. When it comes to fundraisers, the more, the merrier.
Your fundraiser messaging needs to highlight why you’re holding this fundraising campaign. Why now? Who are the beneficiaries? What will be the impact of donors’ dollars? Tell a compelling story, clearly and authentically.
No fundraiser lasts forever, so let your supporters know why they need to donate to your fundraising campaign stat. Everyone has a lot on their plate these days, so a little procrastination can lead to a lot of lost revenue.
Giving to a fundraiser should be as easy as possible. Your donate button should be prominently displayed, and your donation form should take less than a minute to fill out. It should be a snap to sign up for a recurring gift. And if you’re having a fundraising event, you should have mobile readers to take credit cards—and IT support in case something’s not working.
Your fundraiser is over, but your work isn’t. Once a fundraiser ends, you have the opportunity to turn new donors into recurring donors and dedicated supporters. Send an update, say thank you, and stay in touch. That fundraiser could be just the beginning of a lifelong friendship.
Asking for donations from businesses is different from approaching individual donors. First, decide if you’re asking local businesses or larger corporations. Find a point of contact, fill out any necessary forms, and make your case. Then, let your appreciation be known, and remember to follow up.
With most donations, the donor receives a warm-fuzzy feeling and a thank you in exchange for supporting a good cause. But businesses expect a bit more, often in the form of positive press. They might run a crowdfunding campaign for you and expect a feature in your newsletter, or they might sponsor a fundraising event in exchange for seeing their logo in the program. The key takeaway here is to establish expectations early on so no one is disappointed.
A small local business owner might appreciate an in-person meeting, while a big corporation might prefer a letter and properly filled-out online forms. Tailor your request and your tone to the business, just like you would with individual donors.
Lapsed donors are a minor tragedy, and lapsed corporate donors are a slightly-more-major one. Cultivate that relationship by staying in touch and letting your business buddy know about upcoming sponsorships, matching-gift opportunities, volunteer days, and more.
And there you have it! How to ask for a donation via email. Email is an excellent medium for fundraising. You have space, you have time, it’s cost-effective (AKA free), you can include images, and there’s no postage. (But P.S., we love the USPS, so send mail!). If you’re still wondering how to ask for a donation in an email, let us break it down for you.
The sharks in Finding Nemo knew that fish are friends, not food; you know that donors are people, not numbers. Personalize your donation emails as much as possible, using names and past donation information (psst, this is where segmenting your donor data makes a difference). BTW, with Funraise you can automate your emails AND personalize them—check and mate!
Your email ask should be clear, genuine, and succinct, which means you want to ask for that donation early on. Don’t make your readers wade through paragraphs of text, wondering aloud what the heck this email is all about. Let them know exactly why you’re writing and how they can take action to make a difference.
Make sure that gorgeous donate button is front and center so that no one has to search for a way to donate. You can also link to your donation page as well as provide a number and address for offline donations—and every one of these giving options should take a mere two seconds to find.
Unlike texts, emails give you the space to tell a story. So, tell a really good one. Highlight your mission, include real photos, and emphasize how your reader can be a part of this meticulously crafted tale—giving it a very happy ending indeed.
Now that you’re an expert on how to ask for donations, you’re probably wondering what it actually looks like IRL. As you can imagine, it depends on who you’re asking, how you’re asking, and your nonprofit’s special sauce. When it comes to crafting donation messages, we encourage you to do some finger stretches, have a triple caramel macchiato, and unleash your inner Hemingway. (Scratch that; he’d probably write a terrible donation request.) If you’re still feeling stuck, here are some donation messages examples for inspiration.
When it comes to asking for donations on social media, cover your bases by covering all the major channels. For example, if you craft a great donation ask for Facebook, you can tweak it to work with Instagram (focus on the image) and Twitter (160 characters for the win).
Beyond the big three, use YouTube if you have compelling videos and LinkedIn if your donation request is also kind of a think piece? It could happen. For now, we’ll review the basics with these examples of how to ask for donations on social media.
Sean’s desk was looking a little drab during his daily Zoom meetings, so we bought him this brassavola orchid. Isn’t it gorgeous? You can help struggling home-office workers like Sean spiff up their workspaces. If you give today, $10 can buy an orchid for a desk in need. #anorchidaday
This is Carla. As you can tell, she is SO excited. If you want all kangaroos to be as happy as Carla, you can give to our annual #jumpbuddies campaign, which provides fashionable hats for kangaroos that need a little more pep in their step.
If you’ve got all that, you’re well on your way to successfully asking for donations online. Whether it’s asking on social media, via email blasts, or over a Slack happy hour, the internet is your online oyster, so you should feel free to experiment and explore. To get you started, here’s a basic template with suggested donation wording for returning donors. You can tailor it to your needs.
Once you’ve written an incredibly compelling, convincing, and successful donation request email, you’ll need to write a great thank you email (and send it off quickly). Here’s a donation email example for following up with donors. Remember that personalization is particularly important here!
While your nonprofit’s main job is fighting hard for your cause, you need to know how to ask people to donate if you’re going to have the funds to make a difference. We encourage you to get out there and ask for donations in as many ways as possible to find what works best for you.
No matter how great a job your nonprofit is doing, it means nothing without the ability to tell your story. Use words and images to convey your mission, history, and goals to would be donors, and let that story ground all your donation requests.
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According to IRS Publication 1771, Charitable Contributions - Substantiation and Disclosure Requirements, donors must have a contemporaneous written acknowledgement from the recipient not-for-profit entity (NFP) in order to claim a tax deduction for each charitable contribution that exceeds $250. Generally the burden for obtaining substantiation is on the donor, as NFPs are not required to provide written acknowledgements for contributions received, except in the case of quid pro quo contributions of more than $75. However, organizations can express their appreciation by providing timely written communications that will substantiate their donors’ tax deduction claims.
Both hard-copy and electronic formats are acceptable as long as the donor receives the acknowledgement by the time they file their return or the time their return is due, whichever occurs first. However, acknowledgements are not submitted with donors’ tax returns; they should simply be retained to substantiate contributions.
Having a customizable template for donor acknowledgements helps NFPs thank donors in a timely manner, boosting donor relations. The acknowledgement process also promotes accurate recordkeeping for contributions, which is essential for NFP financial reporting and compliance. A good internal practice is to have both finance and fund development staff review the template to ensure it supports IRS compliance, but also supports the organizational tone of donor communications.
Below are four sample contribution acknowledgements you can adapt for your organization’s use in helping donors substantiate claims for their tax-deductible contributions.
SOC is recognized as a tax-exempt organization under section 501(c)(3) of the Internal Revenue Code. Contributions to organizations with 501(c)(3) status may be tax deductible. Please consult your tax advisor to determine deductibility of this contribution. This letter is your receipt for income tax purposes.
Thank you for your donation of [describe donated services or use of facilities] on January 24, 20XX [or during the period of January 1, 20XX through June 30, 20XX] to Save Our Charities (SOC) in support of our mission to provide advisory and training services that help charitable organizations be more effective.
SOC is recognized as a tax-exempt organization under section 501(c)(3) of the Internal Revenue Code. Contributions to organizations with 501(c)(3) status may be tax deductible. There are specific rules affecting the deductibility of donated services (or donated use of facilities), and we recommend that you consult your tax advisor to determine deductibility of this contribution, including any related out of pocket expenses. This letter is your receipt for income tax purposes.
Thank you for your charitable gift in the amount of $XXX,XXX from your Individual Retirement Account (IRA) on January 24, 20XX in support of our mission to provide advisory and training services that help charitable organizations be more effective. This acknowledges that we received your gift directly from your plan trustee/administrator and that it is your intention for all or a portion of your gift to qualify as a qualified charitable distribution from your IRA under section 408(d)(8) of the Internal Revenue Code.
SOC is recognized as a tax-exempt organization under section 501(c)(3) of the Internal Revenue Code. Your gift was not transferred to either a donor advised fund or a supporting organization as described in section 509(a)(3).
Even when written acknowledgements are not required by the IRS, it is still a good practice for NFPs to thank donors for gifts of any amount. This best practice improves recordkeeping and donor relations.
Prompt and thoughtful gift acknowledgments are central to effective fundraising. IRS regulations govern what documentation donors need in order to claim a deduction for their charitable contribution. The IRS website provides a comprehensive section on gift substantiation.
What should a "thank you" to donors include? There are no magic words that each nonprofit must include in "thank you" notes to donors; however, it’s important to be familiar with what donors expect, as well as what the IRS requires charitable nonprofits to include in the "gift substantiation" message. We also encourage you to think about how to say "thank you" in a personal and meaningful way.
When should a gift acknowledgment be sent? Soon! Donors expect to receive a "thank you" for any size of contribution, and they also expect it soon after making their gift. Sending the acknowledgment within a short period of time reassures the donor that the donation was received, and solidifies donor relations. Technically donors don't need the substantiation until sometime before they file their personal tax returns for the year the gift was made.
There are other ways to acknowledge a gift in addition to a written gift acknowledgment that is sent to the donor, whether via email or regular mail. Many nonprofits include a list of current donors in an annual report, or on their website; donors often look for their names on those lists and may be puzzled if they don't see themselves listed. They also may be unhappy if they have asked to remain anonymous and their name is listed. Make sure you know whether and how a donor would appreciate public acknowledgment of a gift.
Generally, if the donor directs a grant to be made to your organization though a Donor Advised Fund (DAF) such as Fidelity Charitable or Vanguard Charitable, a DAF held at a community foundation, or through one of the DAFs that are set up to receive online donations such as Network for Good or PayPal Giving Fund, you’ll be given the donor’s name and contact information along with the grant. You’ll want to send an acknowledgment thanking the donor for the gift, but you don’t need to include language about the gift being tax-deductible, because the DAF already provided a tax receipt to the donor. Some experts recommend that your acknowledgment read something like, “Thank you for recommending the generous grant of $500.00, that we received on
Sometimes a donor will ask a nonprofit to write a letter vouching for the dollar value of a non-cash gift. It is not the nonprofit's role to place a market value on contributions, and nonprofits don't want to be caught between the IRS and the donor if the market value of a gift is disputed, so the most appropriate response is to compose a gift acknowledgment message that only describes whatever it was that was contributed, without placing a dollar value on it. For non-cash /gifts-in-kind contributions with a claimed value of $5,000+ donors generally need an appraisal prepared by a qualified appraiser in order to claim the deduction. (Charitable nonprofits should not act as the appraiser.) See IRS Notice 2006-96.
More than making sure they know how much you appreciate their gift, donors need acknowledgment letters in order for their donation to be tax-deductible. And that letter needs to have the right information. Without it, your donors might be left high and dry–and less willing to support your mission in the future.
This is pretty straightforward—if you receive a donation of liquid money, then you’ve received a cash gift! Regardless of whether you get this contribution through a check, cash, or credit card, “cash” refers to the type of gift and not just the method of giving.
This means instead of getting money, someone donates goods or services to your organization. Usually, large businesses and corporations make these kinds of donations. An example would be a large grocery chain providing your organization with gift cards to purchase materials for a fundraising event.
People often donate stock to charities. It is considered more beneficial for the nonprofit and the donor. Since the donation is in stock, the contribution value and tax-deduction both increase up to 20%.
Legacy donations are planned future giving in which the donor leaves a gift in their will for the nonprofit of their choice. It may include a part of one’s property or estate and is made to create a lasting impact.
When you get nonprofit status, one of the huge perks is that donations to your organization are tax-deductible. This is a great incentive for your donors to give to your organization year after year—and it means you need to do everything required to stay in good standing with the IRS and your donors.
Focus on messaging that shows the donor their role in your organization’s mission. How will their donation be used to serve your mission? Donors will be more likely to give again in the future if they can see how their donation is working.
You don’t want your donor to wonder if their payment went through. Whether they’re giving to your organization online or in person, they want to know that there were no issues with processing and that they were charged for the correct amount.
You want your donor to feel like their gift—and giving in general—is a priority for your organization. If you’re too busy to send an acknowledgment, a donor might think you aren’t running your organization efficiently.
Although not required by the IRS, some organizations also include their address and their Employer Identification Number (EIN). It’s up to you how much information you put in your letter, but you must clearly state the name of your organization and clarify what kind of nonprofit your organization is—501(c)(3), 501(c)(5), etc.
This should be the name the donor used to make the gift. If you choose to send physical acknowledgment letters, you may also need to include your donor’s address on the letter to follow proper business letter practice, but this is not required.
Although not required by the IRS, including the date on your acknowledgment letter is a service for your donor. The IRS asks that donors keep records of their donations over $250 like bank statements or credit card statements, but if the donor does not have access to these materials the IRS will accept the donation receipt as evidence of the date.
As long as your letter includes all the information listed above, you may format your acknowledgment letter however your organization sees fit. However, keep in mind that your letter is a reflection of your organization—so you want it to reflect you in a good light!
One or two brief, clear body paragraphs. The meat of your letter should be where you include the necessary information required by the IRS. This is also your opportunity to show your donor how grateful you are for your gift by including some concrete examples of how their donation can be put to work towards your mission.
A valediction. This is your “signing-off” phrase. Most organizations choose “sincerely,” but you can change this depending on the preference of who signs each letter. Other options include “warm regards” or “our many thanks.”
Signature. Your donor acknowledgment letters should be signed by an important member of your nonprofit. This can be the development director or even the executive director. It might change depending on if someone in the organization has a stronger relationship with any particular donor. Be sure to include the signer’s title.
This is the most common way to acknowledge donors. You can choose to send your letters through the mail or as an attachment via email. Some organizations have even turned to sending postcards instead of letters, but you should exercise caution with that since you want to protect your donor’s privacy.
You know how important donations are to your organization. When someone goes out of their way to support your work, it’s important to provide them with everything they need to feel properly appreciated and to reap all the benefits donating provides them.
By doing the front-end work of making sure your form donor acknowledgment letter has all the necessary info and then automating the actual sending process with Donorbox, you’ll never have to worry that you’ve missed thanking a donor. Use the samples provided in this article as a starting point to craft an acknowledgment letter your donors will be happy to receive.
Donorbox is a powerful fundraising solution having served over 50,000+ organizations across the globe with its advanced features like recurring donation forms, crowdfunding, fundraising pages, peer-to-peer fundraising, Memberships campaigns, and more. Learn more about us on the website.
Lindsey Baker is a writer and nonprofit professional, drawing from her experience working various roles at an art nonprofit. Over the years, she has learned keen administrative and development strategies to make every aspect of a nonprofit's fundraising strategy shine.
Your nonprofit’s donors are the backbone of your organization. Without their support, you wouldn’t be able to achieve your mission, advocate on behalf of your cause, or bring awareness to the issues you represent.
In this article, we’ll answer all of your biggest donor acknowledgment letter questions so you can be confident that your organization is sending the best possible gift acknowledgments to your valued supporters (and providing the necessary information required by the IRS).
Gift acknowledgments. Either sent as formal letters or emails, these include IRS-mandated content outlining information about a gift in excess of $250.00 made by individual donors. They may use these to write off their contribution on their tax return.
Don’t worry, though. With effective fundraising software tools like automated donation acknowledgments, your team can build gift acknowledgment templates that automatically populate the correct donor information without manual input.
Since donor acknowledgment letters contain the information required by the IRS as proof of giving for donors who want to write off their contribution on their tax return, the federal agency sets core standards for these messages that must be met by nonprofits.
In addition to these details, your nonprofit will also need to acknowledge if your organization provided any goods or services to your donors in exchange for their gift. For most nonprofits, this would be something like a member t-shirt, a thank-you mug, or a small gift card.
Above all, your donor acknowledgment letters should contain the information listed in the previous section. Your letter, however, still needs to endear donors to your nonprofit and strengthen your relationship. It’s a letter, not a donation receipt!
Another tip to note is that the effectiveness of your donor acknowledgment letters as retention and stewardship tools is undercut if these are the primary communications donors receive from your team. Be sure to frequently engage your supporters year-round!
A letter like this is functional for tax-reporting purposes, but also for building a stronger relationship between your donor and your organization. Tying their gift to a concrete outcome helps them visualize the impact of their philanthropy on their community, and they’ll feel appreciated and recognized by your organization.
If your nonprofit wants to retain donors for years to come, you’ll need to perfect your donor acknowledgment letter strategy. Now that you’ve reviewed these expert tips, you can get started revitalizing your organization’s acknowledgment letters!
Any time your nonprofit organization receives a donation, it’s important to express your gratitude – no matter how large or small the contribution may be. But if an individual donates more than $250, the IRS also requires your organization to provide a formal acknowledgement letter that the donor can use for tax purposes. These letters should be mailed or emailed to your donors every year by January 31.
In addition to these specific items, your organization can also use the donor acknowledgement letter as an opportunity to engage your supporters and share information about your nonprofit mission, accomplishments, and goals for the future.
In exchange for this contribution, you received [GOODS OR SERVICES – WITH ESTIMATE OF FAIR MARKET VALUE]. Your contribution is tax deductible to the extent that it exceeds the value of the goods and service our organization provides in return. Please retain this letter for your tax records.