Nothing can cause more confusion between your finance and fundraising departments than the Internal Revenue Service (IRS) requirements for donation acknowledgements. Never fear! We're here to shed a light on what often feels like a murky area.
IRS Publication 1771 is a great tool that goes into all the documentation requirements a donor must meet to receive a tax deduction. Here are the key take aways for cash gifts:
A donor cannot claim a tax deduction for any contribution unless the donor maintains a record of the contribution. A cancelled check can be considered a record.
However, with gifts of $250 or more, a donor must have written acknowledgment of the contribution from the recipient organization to claim a tax deduction with the following:
- The name of organization
- The amount of the gift
- A statement that no goods or services were provided by the organization in return for the contribution
You can provide donors individual letters or annual summaries to meet this need. Annual summaries can be a nice way of connecting at the beginning of the calendar year to let them know total gifts from the previous year. Also, they’ll have the information when they need it at tax time rather than hunting down a letter they received months and months ago.
If you do provide goods or services in exchange for contributions, or Quid Pro Quo donations for events, read Publication 1771 for further information and maybe find a CPA to join your Board of Directors!
To move beyond the IRS receipt and practice donor thank you strategies that boost sustaining donors as well as tactics for extending the Salesforce Nonprofit Success Pack to support those strategies, watch our recorded webinar recording, Operationalizing Gratitude: Effective and Timely Thank Yous for Increased Donor Retention.
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