What Is A Donation Acknowledgment Letter?
A donation acknowledgment letter is a letter sent to a donor thanking them for their gift. Additionally, it’s an opportunity to provide official documentation to donors who have given a gift of more than $250. The IRS requires nonprofit organizations to provide a formal acknowledgment letter to these donors for tax purposes.
Donation acknowledgment letters must be sent by January 31 each year and should include the following information:
- donor name
- full legal name of the organization
- declaration of organization’s tax exempt status
- organization’s employer identification number
- date the gift was received
- amount and description of gift
- any exchanges your organization provided for the donation
However, if the donor’s gift is under $250, tax information is not required and an acknowledgment letter is simply an opportunity to express your gratitude for the donor’s generosity. Regardless of the size of the donation, we recommend that you send your donors a donation thank you letter every time they give.
How Do Nonprofits Send Donation Acknowledgment Letters?
Many nonprofits use a donor management system to automate their acknowledgment letters. Although you could create a system using spreadsheets and mail merge, most donor management platforms will save you a lot of time by automatically creating a list of the donors that you need to acknowledge for their gift.
For example, with Kindful you can automatically trigger emails or mailings to go out when a certain action occurs—like a donor making a payment. Or, if you want to send a special acknowledgment to your major givers or recurring givers, you can set a task to follow up with a call or visit.
This automated feature ensures that your organization is compliant with the IRS, helps establish good communication with your donors, and reminds you to do the tasks that strengthen your donor relationships.
All donors deserve to be recognized, no matter the size of their gift. Use donor acknowledgment letters to show your gratitude and provide donors with important information they’ll need come tax season.
- Altruic Advisors post: How to Write a Donor Acknowledgment Letter
- Kindful blog: [Checklist] How To Effectively Personalize Your Donor Thank You Letters
- IRS guidelines: Charitable Contributions – Written Acknowledgments