Sending thank-yous to your donors doesn’t just make sense in terms of building and maintaining relationships. The IRS mandates that taxpayers substantiate single contributions of $250 or more with contemporaneous written acknowledgments. Here’s what you should include in those acknowledgments.
A written contribution acknowledgment should contain:
- The name of your organization,
- The amount of the contribution,
- The date of the contribution,
- A description (but not the value) of noncash contributions,
- When appropriate, a statement that no goods or services were provided by your nonprofit,
- When appropriate, a description and good-faith estimate of the value of any goods or services provided in exchange for the contribution, and
- When appropriate, a statement that any goods or services provided consisted entirely of intangible religious benefits.
Some state tax authorities also require a tax- exempt status statement with your organization’s Employer Identification Number.
The IRS leaves it up to nonprofits to decide on the appropriate medium for donation acknowledgements. For example, it could be a letter, postcard, email or text.
According to the IRS, acknowledgments are “contemporaneous” when donors receive them by the earlier of 1) the date they actually file their income tax returns for the year of the contribution or 2) the due date of the return. But, from a strategic perspective, you’re best off sending acknowledgments out as close to the receipt of the donation as possible. l
To learn more about how our firm can serve your nonprofit organization, please contact Dave Wolfenden at (302) 254-8240.