IRS requirements for Acknowledging Donors
Charities must send written acknowledgements of donations and contributed property worth $250 or more. Nonprofits should send a written document and retain a copy for its records. The acknowledgement must include:
- Amount of cash contributed (or description, but not the value of property other than cash).
- Whether or not the organization provided goods or services in exchange for the contribution. An exchange of goods or services reduces the tax deductible amount by the retail value of the good or service exchanged.
- Additionally, if goods or services were provided in exchange for the contribution, the acknowledgement must include a description plus a good faith estimate of the value of the good or service exchanged.
- Acknowledgement of an “intangible religious benefit” if true of the goods or services provided. An example of this would include admission to a religious event.
For more information on IRS requirements regarding charitable contributions consult IRS Publication 526.
Importance of Showing Gratitude
Showing gratitude to those who make gifts to your organization should be an essential part of your development work. This process of showing gratitude is often referred to as stewardship. Organizations should consider developing strategies for how donors that make gifts at various levels, such as annual fund donors, mid-level donors and top donors, will be thanked. If these strategies are included in the organization’s annual development plan, it will be much more likely that resources will be devoted to this area. Stewardship can also be an opportunity to get board members involved in fundraising – have them make phone calls to thank donors or write personal notes.
Effective Thank-Yous are:
- Timely
- Genuine
- Specific to the gift and giver
- Make the giver feel special and appreciated
- Highlight the use and benefits of the gift
Organizations that invest in thoughtful stewardship can expect more repeat gifts, bigger gifts, friends for life and goodwill, and good public relations.