Receipts for donations are an important element of the giving process and recognizing donors. While the content is simple, the timing and manner in which you deliver them might make the difference between happy donors and tax season difficulties. Receipts should be streamlined in a method that is fully approved by the IRS. Donation receipts should always be handed out to donors.
Donation receipts benefit both donors and your organization. Donors use them to confirm that their gift was received and to deduct charitable contributions from their taxes. Donation receipts can be used to help with bookkeeping and to keep track of a donor’s history with your organization. While sending a donation receipt is only necessary for gifts over $250, it’s advisable to send a separate receipt for each donation. No goods or services can be traded for the donation amount in order for it to be tax-deductible. Event tickets, online store purchases, and raffle ticket purchases, for example, are not tax-deductible.
Useful Practices When Writing Donation Receipts
Taxes are complicated enough, so it’s important to keep receipts simple and easy to understand to make filing easier for your donors. Here are some good practices you can do to ensure that your donation receipts are the best.
Keep the Formatting Simple
Your contributors should be able to rapidly scan the receipt for the information they require, such as the amount of their donation, your organization’s federal tax ID, and the donation date. Choose a simple email with minimum design components, if any, to make this information easy to access. Also, any flowery wording should be saved for your thank-you note. For a donation receipt, a brief line expressing your gratitude is great.
Remember Donations of Goods & Services
Proper receipts are equally as vital when it comes to donations of products and services. Maintaining your standard monetary donation receipting practices demonstrates that you value-in-kind gifts equally to cash donations. If the value of the donation exceeds $250, you must get a donation receipt for goods and services. Although it is the donor’s obligation to offer an estimate of the donation’s value, your organization should note the donation’s fair value in your receipt as a courtesy.
Make Use of Automation
Automated receipting is a standard 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 consistency can make life much easier for your donors who give multiple times a year.
A well-written thank you note does not replace a donation receipt! Even if you’ve already expressed your gratitude in the document. First-time contributors who receive a personalized thank you message within 48 hours of their gift are four times more likely to donate again. While this may appear to be a lot of labor, it is readily mechanized with software. To preserve your personal touch, use mail merge tags.
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