Donation Tax Receipts: What Nonprofits Need to Know
This article contains affiliate links. If you sign up through one of them, I may earn a small commission at no extra cost to you. Details
This article contains affiliate links. If you sign up through one of them, I may earn a small commission at no extra cost to you. Details
If you accept donations, you need to send tax receipts. The IRS has specific rules about this, and getting it wrong can create problems for both your nonprofit and your donors.
Here's what you actually need to know.
When receipts are required
The IRS requires a written acknowledgment for any single donation of $250 or more. But in practice, you should send a receipt for every donation. It's good donor relations and most platforms do it automatically.
For donations under $250, the donor can use their bank or credit card statement as proof. But a receipt from you is still appreciated and builds trust.
What to include on a receipt
Every donation receipt should have:
- Your organization's name and EIN (tax ID number)
- Date of the donation
- Amount of the contribution
- Statement that no goods or services were provided in exchange (or a description and good-faith estimate of what was provided)
- A note that the organization is a 501(c)(3)
That last bullet matters. If a donor buys a $100 gala ticket and receives a $40 dinner, the deductible amount is $60. Your receipt needs to reflect that.
How platforms handle it
Most donation platforms send automatic email receipts after each gift. Here's how the major ones compare:
- Donorbox sends automatic receipts with your org name, EIN, and tax language. You can customize the template.
- GiveButter also sends automatic receipts. You can add your EIN and customize the message.
- Bloomerang generates receipts through its CRM, with more customization for year-end summary statements.
If your platform doesn't handle year-end summary letters (a single statement listing all donations for the year), you may need to generate those manually or use your CRM.
Common mistakes
Not including the "no goods or services" language. The IRS requires it. If your receipt just says "Thank you for your $500 donation" without the goods/services disclosure, it technically doesn't meet requirements.
Sending receipts late. Receipts for cash donations must be provided by January 31 of the following year. Don't wait until donors ask for them in April.
Forgetting about non-cash donations. If someone donates property, stock, or goods worth over $250, you need to acknowledge it. But you should not assign a dollar value. The donor is responsible for getting an appraisal.
Keep it simple
For most small nonprofits, the automatic receipts from your donation platform cover 90% of what you need. Just make sure your EIN is in the system and the tax language is included in the template.
If you do events or anything where donors receive something in return, double-check that your receipts show the fair market value deduction.