Wondering why you need to share donation receipts with your donors? Keep reading as we share why they matter, what to include, and how to customize and automate them to save time and raise more funds!
Join the fundraising movement! Join the fundraising movement!Donation receipts help meet IRS requirements, track donations, and build stronger relationships with donors while maximizing engagement. After all, donors love it when you show your gratitude for their valuable contributions to your cause!
Regardless of your tax-exempt status, sending a receipt shows donors that their gift arrived where they intended it to go and that you appreciate their donations, no matter the size.
In this article, we’ll walk you through everything you need to know about nonprofit donation receipts and how to send them.
Disclaimer: By sharing this information, we do not intend to provide legal, tax, or accounting advice, or to address specific situations. The above article is intended to provide generalized financial information designed to educate a broad segment of the public. Please consult with your legal or tax advisor to supplement and verify what you learn here.
A donation receipt is a written acknowledgment that a donation was made to your nonprofit organization with a proper legal status. As a registered nonprofit, you can issue both official donation tax receipts and more informal receipts.
Donorbox makes it easy for you to send one-time, recurring, and yearly receipts with a full contribution record for the current fiscal year. Donation receipts are automated, so your donors receive one immediately after they’ve made a donation – no extra work required on your end!
Customize your receipt to align with your brand and needs. As shown below, you can personalize the email message with the donor’s first name, add donation details, and many other variables to create a more targeted approach.
Donation receipts let donors know their donations have been received. Additionally, donation receipts help your donors keep track of their finances. Plus, donors need donation receipts if they want to claim charitable contributions for tax purposes.
If a donation exceeds $250, the donor must obtain written acknowledgment of the donation before claiming a charitable contribution on their federal income tax return.
A donation receipt is also a chance to show donors that your organization is responsible, transparent, and grateful for their support.
Donation receipts can reduce income tax owed by people and businesses that donate, and because of this, they can encourage more donations.
Proactively sending donation receipts is key to building long-lasting and trusting relationships with your donors. Plus, it’s the perfect opportunity to acknowledge and show your appreciation for their donations.
For first-time donors, this is one of their first interactions with your nonprofit website and donation experience, and it will have a huge impact on whether or not they decide to give again.
There are no rules about when to issue official donation receipts. Many nonprofits send out receipts by the end of the year or in January of the following year (in case of year-end donations).
However, donors expect to receive a “thank you” for a contribution of any size, and they expect it soon after donating. So, it’s advised to send out a donation confirmation, which typically includes a receipt, within 24 to 48 hours of the donation being made. This can be achieved by automating the process of issuing donation tax receipts (more on this below).
These guidelines are important and support overall nonprofit compliance.
There is no legal requirement for gift acknowledgments for contributions of less than $250 unless the donor receives something of value in return for the gift, which triggers special rules for “quid pro quo” contributions.
Note: If a donor has an annual membership with your nonprofit organization, they don’t need a receipt if the annual cost is $75 or less and goods or services were provided in exchange.
Here are basic donation receipt requirements in the U.S.:
If your organization provides intangible religious benefits, be sure to include a statement like, “The organization provided intangible religious benefits or services to the donor.”
Learn more more these requirements here.
Include your physical mailing address and EIN (Employer Identification Number) to confirm your tax-exempt status. Although not required, donors will need to provide this information with their taxes. Therefore, it’s a kind gesture to provide all that information for your supporter’s convenience.
Pro tip: Be extra careful around year-end when a donor could mail a check in December but you don’t receive it until January. Make sure you report the correct date on the donor receipt.
There are different rules to follow on a donation receipt depending on where you live, so it’s best to go directly to your government’s website to check for accurate information, especially since rules and regulations can change.
Although your nonprofit doesn’t need to send the year-end donor receipts, it’s a nice gesture that makes tax time easier for your donors, since they’ll have an itemized look at their donations throughout the year.
With Donorbox, you can send year-end tax receipts to an individual or all donors from the same donation form and donation page. Plus, you can personalize the message on your receipt – here’s the step-by-step guide.
See how easily Donorbox lets you customize the email content and the subject to personalize your communication.
You also get to attach a PDF copy of the receipt to the email. You can select the fiscal year period and customize the thank-you message to be added inside the PDF.
Here’s how it looks:
Send Customized Year-End Tax Receipts
Bonus resource: Download our free year-end tax receipt templates to make this process even easier for you and your team.
Donorbox lets you quickly customize and automate your donation receipts. Once a donation comes in through the Donorbox donation form, it automatically emails the receipt to the donor.
Here’s how to create and automate a 501(c)(3)-compliant receipt with Donorbox:
You can also access general receipt settings on your Donorbox account under “Engage.”
From here, you can set a “reply to” email address in case the donor wants to reply to the donation receipt email, improving the overall donor experience.
Donorbox also enables you to send a consolidated receipt of the year’s donations to one or all donors in just one click and attach a PDF of the donation receipt in a separate email.
For best results, write a personal acknowledgment letter with a receipt that includes the IRS-required elements.
In this acknowledgment letter, thank your donor and highlight the impact of their gift. This is a great opportunity to strengthen donor retention!
When you send a donation receipt via email or snail mail, include the donor’s name. Using their first name reassures them that the data is accurate and trustworthy. Also, use a real person’s name and make the email address from which you send the donation receipt appear as human and as trustworthy as possible.
It’s best practice to track all of your income – in this case, your donations. Besides donation receipts, try to maintain separate recordings of each donation, no matter the amount. This includes non-monetary donations, such as land or other types of property.
Keep track of pledges, too; remember to track pledges in the same year donors made it, even if the gift doesn’t arrive in that fiscal year.
Donorbox donor management streamlines and automates the process for you. Every donation you receive through your Donorbox campaigns gets stored in your donation database, so you can easily pull data on how a campaign is doing.
Plus, Donorbox’s reporting templates allow you to pull the following customized reports:
This means tracking your donations and making sure all of your donors are adequately acknowledged is easier than ever.
Although it isn’t required, a year-end summary receipt is a consolidated record of all the donor’s donations in one place. This makes it easier for your donors because they don’t need to keep track of multiple single receipts. Donors can thus organize their records and get ready for accounting or claiming tax deductions.
Provide donors with any year-end receipts prior to January 31 of the following year when you finish processing your year-end donations. Donorbox makes it very easy to send automated year-end receipts to your donors, as mentioned earlier!
Donation receipts are an opportunity to lead donors down a strategic path that gets them more involved and interested in your organization.
Ask yourself what would make you want to dive deeper. For example, short videos are a great way to personalize the transactional process of giving a donation, as are dynamic and high-quality photos. You could also include testimonials or highlight milestones from a recent fundraising campaign.
Pro tip: Don’t ask your donor for something more. It’s time to thank them and allow them to get more invested in your mission.
Donation receipts can be confusing and time-consuming, but they are an important part of your fundraising efforts. Make sure that you familiarize yourself with the donation receipt requirements for your country. Then, invest in the right fundraising tools and software, like Donorbox, to make the process easier and free up time for interacting with your donors or creating big fundraising campaigns!
Donorbox’s features are highly effective, powerful tools for scaling your fundraising and donor management.
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Ilma is a content writer with over eight years of experience, specializing in nonprofits and social impact, marketing, language, and psychology. She draws on years of volunteering in the nonprofit sector to craft thoughtful, research-informed pieces. Ilma is also a therapist passionate about mental health and often weaves this perspective into her writing.
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