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Donation tax receipts are a must. No, seriously. For any charitable gift over $250, the IRS requires that nonprofits send a receipt—and nobody wants to make the IRS unhappy.
But donation receipts can also be a great way to give your donors more than just a dry accounting of their recent transaction. When done right, they can give supporters those warm and fuzzy feelings that are the foundation of donor retention.
Here’s how to create donation receipts—for transactions of any size—that go above and beyond.
Why Do You Need a Donation Receipt?
Nonprofit donation receipts make donors happy and are useful for your nonprofit.
Donors use them as a confirmation that their gift was received; they’re important for anyone who wants to itemize their charitable giving when tax season rolls around. Likewise, at your organization, good donation receipt processes are an important part of staying compliant with IRS requirements.
Your donation receipts need to include transaction details, but they provide lots of opportunities to delight your donors, too. In addition to the information about someone’s gift, you can add thank-you messaging, impact statements, and pictures that reiterate their connection to your cause.
When you follow nonprofit email best practices and add those elements, your receipt will cover your legal obligations and sustain the feel-good emotions people experience when they give to charity.
For all these reasons, even though you’re only legally required to send a donation receipt for gifts above $250, it’s best to send an individual receipt for every donation.
What to Include in A Donation Receipt
What information should be included in a donation receipt? Let’s take a look at both the legally required transaction details and the optional content you can build into your receipt.
IRS-Required Transaction Details
First, let’s talk about the practical information you need to include in your receipt. According to the IRS website:
The written acknowledgment required to substantiate a charitable contribution of $250 or more must contain the following information:
- Name of the organization;
- Amount of cash contribution;
- Description (but not value) of non-cash contribution;
- Statement that no goods or services were provided by the organization, if that is the case;
- Description and good faith estimate of the value of goods or services, if any, that organization provided in return for the contribution; and
- Statement that goods or services, if any, that the organization provided in return for the contribution consisted entirely of intangible religious benefits, if that was the case.
In addition, a donor may claim a deduction for contributions of cash, check, or other monetary gifts only if the donor maintains certain written records.
Let’s expand on that last bullet point about goods and services.
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.
You may encounter instances where a donor’s transaction includes both a purchase and a donation. Say a donor buys a $40 ticket to your upcoming event. They also add a $10 donation in addition to the ticket price. Their total is $50, but only $10 is tax-deductible.
If you find yourself in a situation where donors can make a purchase and a donation in the same transaction, you may want to create a dedicated receipt for that event. Then, include a note about the tax deductibility of their gift.
Thank-You Messaging and Impact Statements
Your fundraising software will automatically send receipts to your donors. Make the most of them!
Adding some thoughtful content to your receipt can transform it from a humdrum transactional email to a heartwarming message that sets the stage for future engagement.
Including a sincere thank-you note and an image in your donation receipts can make a big impression on donors. You can even combine the two if you use a thank-you picture!
Consider including:
- A high-quality image that reminds your donor why they decided to give in the first place. If your receipt’s image contains the same subject, branding, or overall tone as the images you used in your appeal or on your donation form, that’s even better.
- Thank-you messaging that celebrates your donor’s generosity and welcomes them to your community of supporters.
- Some language around how your donor’s gift will make a difference. Try sharing a success story from one of your clients and tell your donor that their generosity will result in similar outcomes. Or share some details about an upcoming program or initiative and mention how your donor’s support will make it possible.
If you plan on following up with a standalone thank-you letter (which we highly recommend you do), let your donor know you’ll be in touch over the next few days. They’ll be more likely to read any future communications when they’re expecting them.
Donors that are brand-new to your organization may benefit from more than a single email. Combining a thank-you letter with a welcome email series can be a great way to start building a relationship with new supporters!
It’s never too early to start working on donor retention. If you want to keep your new givers engaged and excited about supporting your mission, a new donor welcome email series is just the ticket! In this comprehensive guide, we walk you through everything you need to do.
DO: Keep the Formatting Simple
Your donors should be able to scan their receipt and quickly identify the information they need. This includes their donation amount, your organization’s name, the date they made a gift, and their payment method.
If you’ve chosen to include images and copy at the top of your receipt, make sure you include a note that their transaction details are listed below.
DON’T: Forget About In-Kind Donations of Goods and Services
Sending receipts for in-kind donations is harder than sending receipts for online gifts, but it’s still important.
Staying consistent with your receipting practices shows that you appreciate in-kind gifts just as much as cash donations.
Donations of goods—such as vehicles or clothes—and services require a donation receipt if the value exceeds $250. It’s your donor’s responsibility to provide an estimation of their donation’s value.
As a courtesy, your organization should acknowledge that value in your receipt.
DO: Make Use of Automation
Automated receipting is a standard feature in many nonprofit software systems, and it can be a game-changer when it comes to staying on top of your receipting process.
When you automate your receipt generation, you also standardize the look and feel of your receipts.
This kind of consistency can make life much easier for your donors who give multiple times a year!
DON’T: Forget to Say “Thank You”
A donation receipt doesn’t take the place of a well-written thank-you, but it is a great opportunity to celebrate your donor’s generosity.
Add a few sentences thanking them for their support, and let them know the kind of impact they’ve made possible with their gift.
Keep this section relatively short: You’ll want to send a more substantive thank-you letter.
Here’s why.
According to NonprofitHub, first-time donors who get a personalized thank-you letter within 48 hours of their gift are four times more likely to give a second gift.
DO: Remember to Send Out Year-End Donation Receipts
It’s common practice for nonprofits to send a summary of all a donor’s gifts at the end of the year.
A recurring donor, for example, would receive a receipt after each gift, and they’d also receive a statement of all their giving activity for the year.
If you’ve automated your receipting process and send gift acknowledgments directly after someone makes a gift, you’re not technically required to send a year-end letter.
That said, doing so can be a great way to celebrate your relationship with donors who have given multiple times in the past year.
You should send your year-end receipts in early January. That way, they’ll reflect the donor’s activities in the previous year in their entirety.
Nearly a third of giving happens in December, so sending year-end summaries earlier can result in some gifts being missed.
A Nonprofit Donation Receipt Example
This all sounds nice in theory, right? But what does a good nonprofit receipt look like? Here’s an example! We’ll cover the different parts of this donation receipt below.
This example of a nonprofit donation receipt does a great job of explaining the donor’s impact.
1. High-Impact Image
This donation receipt opens with a great image of a student and a tutor working together.
Including a picture like this helps connect the donor to the people who will benefit from their gift and reinforces their connection to the organization’s mission.
2. Personalized Salutation
Using a person’s name in your receipt salutation achieves two goals.
One, it catches their attention and makes them more likely to read your message.
Two, it makes your message feel like it was written for them, and that’s a powerful way to start building (or strengthening) a relationship with your supporter.
3. Thank-You Message and Impact Statement
Instead of opening this message with the donor’s transaction details—which can feel impersonal and transactional—this receipt opens with a sincere thank-you message and a few details about how their gift will make an impact for a student.
This is reiterated by a quote from a student who’s benefited from the organization’s tutoring program, which signals to the donor that their donation will be used wisely to help real people.
4. Note About Future Communications
At the end of the receipt message, donors are alerted to the fact that they’ll receive additional updates about the students they’re supporting with their gift.
Telling donors to expect future communications will make them more likely to see and engage with those messages!
Try setting up different language for new donors, recurring donors, and other supporter segments to make this feel even more personal.
5. Signature
People donate to people. While that’s most important when you’re telling stories—or when you share quotes from clients, like this example does—it’s also important when you consider elements like your signature block.
Using a name, title, and even a small headshot in your receipt’s signature block makes it feel more like a letter from one person to another than a transactional, auto-generated email.
6. Transaction Details
Even though you do want to include storytelling elements and connect personally with your donors, this is still a donation receipt. Your country or state laws may require you to include different information here.
Note that this example includes some language about how the donor did not receive goods or services in exchange for their donation and that the gift is tax-deductible!
This is just a single example of a donation receipt! Yours might be shorter or longer. It will include different stories, branding, and impact statements. You may even decide to switch up the formatting or layout! The specific needs
Writing Great Donation Receipts Can Make a Big Impact
A good donation receipt does two jobs.
It fulfills a practical need for both you and your donors: It ensures you send IRS-required acknowledgments to your supporters, and it’s a great way to make them feel great about supporting your cause.
When you combine your donor’s transaction details with a great image and some thoughtfully written content, you’ve got a practical receipt that sets the stage for donor engagement in the future.
Writing a donation receipt that makes your donors feel good about their purchase and helps inspire them to stick around—-that’s no easy task! That’s why we created this packet of 8 customizable donation receipt templates to help you out. These give you a solid foundation, but it’s the personal touch you add that will make your receipts really stand out.
