This guide outlines the general requirements any US 501(c)(3) public charity must follow for donor receipts. We use this as a reference for best practices to help inform our processes.
- The IRS requires public charities to send a formal acknowledgment letter for any donation of more than $250. The donor may use this letter as proof of his or her contribution and claim a tax deduction.
- In practice, most charities send an acknowledgment for all donations, even small ones.
- Thanking the donor and satisfying the legal requirements, can be accomplished at the same time or separately. Most charities manage to achieve both conditions within one letter.
🌟 Sending One All Inclusive Acknowledgement is Fine There is no need to send a separate letter that is distinct from the IRS required communication. You can include communication thanking the donor with the legally required text.
Types of Donors
We must acknowledge all donors including Individuals, Foundations, Corporations, and non-public universities. Essentially, we need to acknowledge all types of donors that may themselves have an IRS reporting requirement or attempt to claim a tax deduction.
Types of Donations with Exceptions
- In general, any revenue from earned income activities is not considered a donation.
👉 Ensure, if necessary, that funds you are soliciting for earned income are properly characterized and accounted for as an event fee, event sponsorship, or other earned income.
When & How
When to Acknowledge a Donation
Acknowledgment of donation must occur no later than January 31st of the year following the gift. However, best practice suggests that charities should send an acknowledgment as soon as possible after the gift is received.
CS&S aims to send acknowledgements quarterly.
What You Must Include
- Your organization's name
- A statement saying that you are a 501c3 tax-exempt organization
- The date the donation was received
- The amount of the cash contribution (checks, credit card, and payroll deductions)
- A description (but not value) of a non-cash gift. The donor estimates the value of non-cash contributions when reporting them to the IRS on his tax return.
- A statement that no goods or services were provided by the organization, if applicable
- A description and good faith estimate of the value of goods or services, if any, that the organization provided in return for the contribution. An example could be a dinner where some of the money pays for the meal while the rest is a donation.
- A statement that goods or services, if any, that the organization provided in return for the contribution consisted entirely of intangible benefits if applicable. An example might be a small gift valued less than $75, such as a mug or tote bag with the organization’s logo.