How To Write A Donation Acknowledgment Letter

KindfulDecember 14, 2020

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Nonprofit work is a two-way street. You rely on your donors, supporters, and volunteers to reinforce the valuable work you do, and they rely on your knowledge and skillset to make the world a better place. Maintaining this relationship between donors and nonprofits is essential, and one way to make sure your donors feel valued is through donation acknowledgment letters.

A donation acknowledgment letter or donor acknowledgment letter is a letter nonprofits send to thanking their donors for their gift. As we’ll discuss below, it’s also an opportunity for you to provide the official documentation required by the IRS to donors who have given a gift over $250.

We recommend sending either a donation acknowledgment letter or a donation thank you letter every time a donor gives. This gives you the opportunity to connect with your donors, express your gratitude for their support, share your progress and future goals, and make sure your donors know you received their gift.

What do you need to include in your donation acknowledgment letter?

Below, we suggest some best practices for writing your donation acknowledgment letters and provide you with samples so you can be confident your donors feel appreciated. Remember to pay attention to the items for donors who have given a gift of $250 or more.

To ensure IRS compliance, you need to send your donation acknowledgment letters by January 31 each year and should include the following information:

  1. The name of your donor
  2. The full legal name of your organization
  3. A declaration of your organization’s tax-exempt status
  4. Your organization’s employer identification number
  5. The date the gift was received
  6. A description of the gift and the amount received
  7. Any exchanges your organization provided in receipt of the donation

Again, while it isn’t necessary to include this information in donations under $250, it is good practice to acknowledge all donors’ contributions.

How do you format and send your donation acknowledgment letters?

There is no rule on how to format your donation acknowledgment letters. However, the most common types are emails, letters, and postcards. Some nonprofits use the same format for all acknowledgments; others distinguish certain formats for specific donation types or amounts.

For example, if a donor gives a particularly large gift, you may want to have a senior member of your organization send that donor a handwritten acknowledgment so you can go the extra mile to show how much that donation meant to the organization. Alternatively, if a donor signs up for a regular recurring donation, we recommend using a template that tells the ongoing story of your nonprofit so the donor feels connected to your work and continues to partner with you.

If a donation exceeds $250, make sure your acknowledgment abides by IRS recommendations; however, if a donation falls below that threshold, there are many creative ways to thank your donors for their gift.

Below, we’ve included some tips on how to automate this process using your nonprofit CRM. This will allow you to put similar donors into acknowledgment lists and send automated responses based on particular actions. This speeds up the acknowledgment letter process and ensures you never miss a chance to connect with your donors.

Another important reason to automate these acknowledgements is that you don’t want to leave your donors wondering if you received the donation. Send them as soon as possible—ideally within 24 hours of a donation being made.

Sample donation acknowledgment letter template

Here’s a sample donation acknowledgment letter:

Subject: Jemar, thank you for your generous donation to the Sea Turtle Project!

Dear Jemar,

Thank you for your generous donation to the Sea Turtle Project! Donors like you are vital to the continued success of our mission to protect sea turtles from extinction, and we are grateful for your support.

On January 15, 2021, you made a contribution of $275.00 to the Sea Turtle Project. Your gift was processed as a credit card transaction and made in support of our mission.

As a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code (EIN #111-111-1111), every donation makes an impact, and we are so thankful for your support.

No goods or services were exchanged for your contribution, and your gift is tax-deductible to the full extent permitted by law. Please retain this letter for your tax records.

Thank you again for your dedication to conserving the sea turtles’ natural habitat and for helping us prevent the danger of their extinction. We’re excited to continue partnering with you to save the turtles!

Sincerely,
Your Friends at the Sea Turtle Project


Now, we’ll walk you through each section and explain its purpose.

Subject/Preheader

It’s important that your donation acknowledgment preheader briefly alludes to what the message is about. Especially if you’re sending an email acknowledgment, make sure the subject contains words like “Thank you for your donation” or “Donation acknowledgment.” This grabs your donor’s attention and ensures they don’t accidentally overlook your acknowledgment.

Sample subject lines:

  • Jemar, thank you for your generous donation to the Sea Turtle Project!
  • Sea Turtle Project Donation Acknowledgment

Opening

Once you’ve grabbed your donor’s attention, use the opener to welcome them and thank them for the support.

Sample opener:

Dear Jemar,

Thank you for your generous donation to the Sea Turtle Project! Donors like you are vital to the continued success of our mission to protect sea turtles from extinction, and we are grateful for your support.

Body

The body of your acknowledgment letter contains the bulk of your content. This is where you should include the vital IRS information so that your donor has what they need for their taxes.

Sample body text for a cash contribution:

On January 15, 2021, you made a contribution of $275.00 to the Sea Turtle Project. Your gift was processed as a credit card transaction and made in support of our mission.

As a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code (EIN #111-111-1111), every donation makes an impact, and we are so thankful for your support.

No goods or services were exchanged for your contribution, and your gift is tax-deductible to the full extent permitted by law. Please retain this letter for your tax records.


If the donation wasn’t a cash contribution, you’ll want to include a description of the non-cash or in-kind gift donation. The IRS does not require you to list the value of the gift.

Sample body text for a non-cash or in-kind donation:

On January 15, 2021, you made a contribution of a 2020 Mongoose electric scooter to the Sea Turtle Project. Your gift was received as an in-kind donation and in support of our mission.

As a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code (EIN #111-111-1111), every donation makes an impact, and we are so thankful for your support.

No goods or services were exchanged for your contribution, and your gift is tax-deductible to the full extent permitted by law. Please retain this letter for your tax records.


If goods or services were processed in exchange for the contribution, make sure you note these with the fair-market value. According to the IRS, goods or services include both tangible and intangible gifts like “cash, property, services, benefits, or privileges.” There are some exceptions, such as insubstantial gifts like t-shirts or stickers. By including this information, you’re providing the donor with the exact donation amount exceeding the contributed goods or services for their tax records.

Sample body text for goods or services exchanged:

On January 15, 2021, you made a contribution of $275.00 to the Sea Turtle Project. Your gift was processed as a credit card transaction and made in support of our mission.

As a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code (EIN #111-111-1111), every donation makes an impact, and we are so thankful for your support.

In exchange for this contribution, you received a “thank you” basket valued at $50.00. Your gift is tax-deductible to the extent that this exceeds the value of the “thank you” basket. Please retain this letter for your tax records.

Closing

Now that your donor has all the information they need, use your closing to thank them again, update them on your organization’s progress, or introduce more opportunities to give. This should act as a friendly sign-off and make your donors feel like part of your team and shareholders in your mission. This will be your donor’s last impression of your nonprofit until further communication. Make sure to end with a touch of empathy so they know you care about their continued support.

Sample closing text:

Thank you again for your dedication to conserving the sea turtles’ natural habitat and for helping us prevent the danger of their extinction. We’re excited to continue partnering with you to save the turtles!

Sincerely,
Your Friends at the Sea Turtle Project

Use your nonprofit CRM to automate your acknowledgments

After you’ve done the work to write an acknowledgment letter that fulfills IRS requirements and makes your donors feel valued, let Kindful make sure you never miss a chance to thank your donors. Using your nonprofit CRM to automate your acknowledgments means your nonprofit can connect with your donors and continue pursuing your mission simultaneously.

With Kindful’s automatic acknowledgments lists, any acknowledgment list you create will pull contacts to be acknowledged based on filters you prescribe. You can choose to acknowledge contacts based on donation amount, campaign, recurring donations, and much more.

Additionally, Kindful allows you to customize your donation acknowledgment and automatically populates your contact information where you specify. This speeds up the donation acknowledgment process and ensures every acknowledgment has that personal touch.

In using your nonprofit CRM to automate your acknowledgments, you can rest assured that you comply with nonprofit IRS guidelines since you’ve done the work on the front end to keep your donations and contacts in sync.

Schedule a live demo with our team, and we’ll show you how easy it is to create and automate reports, utilize online and offline fundraising tools, quickly integrate and access all your data, and ultimately create more time to engage your donors.

Filed Under:   Donor Management