Your organization is funded mainly through charitable donations and you’re terribly grateful for each one. Without those donations you couldn’t pursue the work you do for your community. You show your appreciation to your donors in many ways, but you also need to provide donors with a proper donation receipt so that they can claim a tax deduction, if they so choose. Even if they don’t claim a deduction, many donors like a proper donation receipt for their records. Below we’ll outline why donation receipts are important, what should be included in one, and how to go about making templates you can use over and over.
Why Are Donation Receipts Important?
A donation receipt is a written acknowledgment from a charity or nonprofit organization that confirms the donation made by an individual or business. This receipt serves as proof of your donation and is necessary for claiming a tax deduction. Without a donation receipt, you (or your generous donor) will not be able to claim a deduction for your charitable contributions.
What Information Should Be Included in a Donation Receipt?
A donation receipt should include the following information:
- The name of the charity or nonprofit organization
- Confirmation of the organization’s 501(c)(3) status
- The name of the donor
- The date of the donation
- A description of the donated item or the amount of the cash donation
- A statement that no goods or services were provided in exchange for the donation
- The signature of an authorized representative of the charity or nonprofit organization
Types of Donation Receipts
Just as there are different types of donations, there are different types of donation receipts. Most of these will look pretty similar to each other, however.
- End-of-year donation receipts include the total amount that a donor contributed to the nonprofit in a year. This helps recurring donors know how much they gave in total, something they’ll need for their tax return. You might also hear them referred to as year-end giving statements.
- In-kind donation receipts refer to goods or services that were donated, rather than money. This might refer to a florist donating arrangements for a nonprofit’s gala, or something as simple as donating a couch to a nonprofit resale shop.
- Monetary donation receipts are fairly self-explanatory: these are for cash donations made via credit card, check, PayPal, or, of course, actual cash.
- Stock donation receipts refer to donated stock shares. You’ll want to ensure that this type of receipt includes the name of the company with which the stocks are associated.
- Quid pro quo donation receipts are particularly apt for our website: these are the kind of receipt you would receive if you won an item in a charity auction.
How to Create a Donation Receipt
Creating a tax-compliant donation receipt is a simple process. Here are the steps you should follow:
Step 1: Format a simple template
Keep your formatting easy to read and find the most important information (organizations, amount, etc.). Make sure to include your organization’s logo and other branding details.
Step 2: Fill in the relevant information
Fill out your receipts manually or, better yet, choose a donation management software that can generate them automatically for both your organization and your donors.
Step 3: Include at least one “Thank you!”
Donors like to feel appreciated (Don’t we all?) so be sure to include a line or even short message thanking them for their support.
Step 4: Print or Save to a Secure Location
Your donors may forget or lose their donation receipts so you need to keep records of these transactions for quite some time. Some recommend saving them for at least six years after the close of the relevant tax year.
Tips for Saving a Receipt as a Donor
by Kelly Sikkema, Unsplash
If you’re wondering about what you should be saving as a donor, here are some tips for saving a donation receipt. Keep in mind that you probably won’t remember the details months later when you’re trying to file your taxes.
- Make sure the receipt is legible and easy to read.
- Include the charity’s tax identification number (EIN) on the receipt.
- If the donation is non-cash, include a description of the item and its estimated value.
- If the donation is cash, include the amount donated.
- If the donation is made in installments, include the total amount donated for the year.
- If the donation is made through a payroll deduction, include the total amount donated for the year and the date of the first and last payroll deductions.
- If the donation is made through a credit card, include the name of the credit card company and the last four digits of the card used.
- If the donation is made through a check, include the check number and the date it was written.
- If the donation is made through a stock transfer, include the name of the stock and the number of shares donated.
Conclusion
Donation receipts are an important part of the donation process. They show appreciation to your donors both directly, with a Thank You message, and indirectly, by making it possible for them to deduct their donation on their taxes.
Moreover, providing IRS-compliant donation receipts are necessary to maintain an organization’s nonprofit status. The IRS doesn’t always check all donation receipts, but filers should act as though they will.
If you’re planning a fundraising event on our site, be assured that our platform automatically generates donation receipts for won auction items and donations. We integrate with third-party donor management systems as well, so your records will be complete.
