Required Tax Receipt Language (and a Tip)

 

The IRS requires nonprofit organizations to provide donors with gift substantiation messages after receiving a donation over $250. For “quid pro quo” donations, however, the threshold is $75.  Rather than merely sending donors receipts, this is a great opportunity to thank donors and provide them with organization updates, while also weaving the required tax receipt language into a personalized thank you letter.

Personalizing Thank You Letters

  • Brand your letter by including your logo and colors;
  • Use the donor’s name in the salutation;
  • Reference the campaign that the donor supported;
    • “Thank you for showing your commitment to our state’s natural beauty by giving to our City Spaces campaign.”
  • Acknowledge any past gifts the donor has made;
    • “We are especially grateful for repeat donors like you”
  • Show the donor how their gift makes an impact;
    • “Your donation is helping to create 12 community parks that will be free and open to the public… Six months from now, families living in the city will have access to grass, trees, and playgrounds. Thanks to you!”
  • Thank you letters should come from a specific staff member and include the staff member’s email address or phone number to show you value the donor’s input.

Required Tax Receipt Language

The required language differs depending on the donor’s contribution. Refer to the contribution categories below to make templates for your donor thank you letters based on contribution type:

Outright Cash Donation

  1. Name of the organization;
  2. Amount of cash contribution; and
  3. A statement that no goods or services were provided by the organization in return for the contribution.

Quid Pro Quo Donation (donor received something in return for their donation)

  1. Name of the organization;
  2. Amount of cash contribution; and
  3. Description and good faith estimate of the value of goods or services that the organization provided in return for the contribution

In-Kind Donation (non-cash)

  1. Name of the organization;
  2. Description (but not the value) of non-cash contribution; and
  3. A statement that no goods or services were provided by the organization in return for the contribution (if that was the case); or
  4. Description and good faith estimate of the value of goods or services that the organization provided in return for the contribution

Required Disclaimer for Nonprofits with Tax-Exempt Status Pending

It’s important to remember that new nonprofits (i.e. you haven’t received your IRS Determination Letter confirming your tax-exempt status yet) must inform their donors that donations are not yet tax deductible. You should include this language on your tax receipts (as discussed above) and on your website until your tax-exempt status is confirmed. But not to worry! Your IRS Determination Later, once received, back-dates your donations to a specific date (usually the date of incorporation).

  • E.g. “We are currently awaiting our tax-exempt status from the IRS. So, until then, donations are not tax deductible. The IRS may allow us to back-date our tax-exemption, so we will let you know if your donation qualifies! All donations are appreciated!” 

Revised by: Zachary Avina – 08/26/18

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