Nonprofit work is a two-way street. You rely on your donors, supporters, and volunteers to reinforce your valuable work, and they rely on your knowledge and skillset to make the world a better place. Maintaining this relationship between donors and nonprofits is essential.
One way to make sure your donors feel valued is through donation acknowledgment letters. A donor or donation acknowledgment letter is a letter nonprofits send to thank their donors for their gifts. 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 lets you express gratitude for donors’ support, share your progress and future goals, and ensure they know you received their gift.
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. Each letter should include the following information:
If a donor gave less than $250, it isn’t necessary to include this information in your acknowledgment letter. However, it’s good practice to acknowledge all donors’ charitable contributions.
When you go above and beyond to show your gratitude, you’ll leave a positive impression on donors, increasing the chances that they’ll give again in the future. Regardless of whether the donation falls above or below the $250 threshold, there are many creative ways to thank your donors for their gifts.
For example, in addition to your acknowledgment letter, you might also call donors on the phone or give them a social media shoutout.
Charitable contribution acknowledgment letters are most often sent via email or direct mail. Some nonprofits use the same format for all acknowledgments, while others distinguish certain formats for specific donation types or amounts.
For example, if a donor gives a particularly large gift, 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, communicate the ongoing story of your nonprofit so the donor feels connected to your work and continues to partner with you.
We’ve created a sample donation acknowledgment letter to guide you in writing your own. Let’s take a look at the full email and then break down each section step by step.
Subject: Jemar, thank you for your generous donation to the Sea Turtle Project!
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.
It’s important that your donation acknowledgment header or email subject line 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 or delete it.
Once you’ve grabbed your donor’s attention, use the opener to welcome them and thank them for their support.
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.
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.
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.
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 charitable 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.
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.
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 equal partners 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.
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
Using your nonprofit CRM , you can segment 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 acknowledgments 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.
Using your nonprofit CRM to automate your acknowledgments means your nonprofit can connect with your donors while simultaneously continuing to pursue your mission.
With Bloomerang’s automated acknowledgment emails and receipts , you can choose to acknowledge contacts based on donation amount, campaign, recurring donations, and much more.
Additionally, our products allow you to customize your donation acknowledgment and automatically populate your contact information where you specify. This speeds up the donation acknowledgment process and ensures every acknowledgment has a personal touch.
By automating your acknowledgments with your nonprofit CRM , you can rest assured that you’re complying with nonprofit IRS guidelines since you’ve done the work on the front end to keep your donations and contacts in sync.
An effective donation acknowledgment letter builds the foundation for stronger long-term donor relationships. By using these tips, you can create a template that allows you to thank donors promptly and genuinely while including any information they may need for tax purposes.
For more information on creating effective donor acknowledgment materials, check out these additional resources:
Schedule a live demo with Bloomerang, 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.
Donor Management • 11/19/20
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