Nonprofit Donor Acknowledgement or Receipt Letters for Tax Purposes

Nonprofit organizations are required to provide donors with a receipt or acknowledgement of their donation so that the donor can claim the deduction on their taxes. This requirement is for donations over $250 but most organizations send these notice to all donors as a common courtesy.

These acknowledgements can be sent by mail or email and most nonprofits do both to ensure the donors receive this information to claim their deductions. Sending donations by mail helps to ensure that donors have a physical copy to use when filing their taxes and sending the letter right before taxes are filed with all their donations from the previous year helps organize all the receipts into one statement which is especially helpful for recurring donors. Sending statements by mail also ensures that donors do not skim over their emails and miss the letter.

Not only is this a requirement, but it is also an opportunity to thank your donors and cultivate your relationship with them. The statements can include additional collateral including thank you cards, information about how the donations were used, and requests for additional donations. This is a great time to ask for additional donations, because donors are reviewing their taxes and can see the deductions they are receiving for their donations.

These letters can be sent out right after donations are made but need to be received before January 31st. Often times it is best to send a statement for all donations in the prior year in January to ensure that all donations are included in a single statement.

Since this is a statement most times it will need to be sent first class mail but depending on how it is written the USPS may provide approval to use nonprofit rates.

Many times CRM software will generate these statements automatically, but it is best to consult Action Mail prior to ensure that the output file is optimized for the best postage rate and most cost effective processing.

Donor Receipt and Acknowledgement letters are great ways to show your donors you appreciate their contribution and facilitate the redemption of tax benefits to them as well as to cultivate your relationship with your donors and increase future donations.