When a nonprofit organization receives a donation, it’s important to express gratitude with a formal acknowledgement letter regardless of the amount received.
A donation acknowledgment letter is sent to a donor to thank them for their contribution and to inform them of the impact their gift will have.
In this quick guide, we will go through what should the included in a donation acknowledgment letter and give you three templates that you can use.
The purpose of writing a donation acknowledgement letters
A donation acknowledgment letter is a thank you letter to demonstrate appreciation and to provide information to the donor about their contribution. Here are some of the reasons why donation acknowledgement matters:
Gratitude
The main purpose of donation acknowledgment letters is to express gratitude to the donor for their contribution and to inform them of the impact their gift will have.
Legal obligations
A nonprofit is required to send acknowledgment letters to individuals who made at least $250 in charitable donations during a calendar year.
Tax deductions
Donor acknowledgment letters can also serve as an official receipt for tax purposes, as it can provide the donor with information for tax deduction purposes.
Relationship building
Sending donation acknowledgement letters can also help to strengthen the relationship between the non-profit organization and the donor. Making donors feel appreciated can be a way to nurture recurring givers.
By expressing gratitude and providing information about how the donation will be used, the non-profit can show the donor that their contribution is valued and will make a difference for the better.
When your donors feel valued, they’re more likely to continue a relationship with your nonprofit.
When to write acknowledgement letter for donation?
According to the IRS, there are two routes to sending donation acknowledgments:
- One acknowledgement letter for every contribution
- One year end acknowledgment letter: An annual summary of all of the donor’s contributions in one year
If you choose the first route, the acknowledgement letter should be sent within a week of receiving the donation. This demonstrates appreciation and helps to maintain strong relationships with donors.
On the other hand, if you choose to send an annual summary to your donors, ideally it should be no later than January 31 of the following year. This is because some donors will need their acknowledgments for tax deduction as early as February.
What should be included in an acknowledgement letter for donation?
The written acknowledgment required to substantiate a charitable contribution of $250 or more must contain the following information:
1. The name of the donor
2. The name of the organization
3. The date the donation was received
4. The amount of cash contribution
5. A description (but not the value) of non-cash contribution
6. A statement that no goods or services were provided by the organization in return for the contribution, if that was the case
7. A description and good faith estimate of the value of goods or services, if any, that an organization provided in return for the contribution
Templates for Acknowledgement Letter for Donation
Example #1: Monterey donation
Dear [Name of the donor],
Thank you so much for your generous donation to [Non-Profit Organization]. Your support is truly appreciated and will make a significant impact on the work that we do.
On [Date of Donation] you made a contribution of [Amount] to [Non-Profit Organization]. Your donation was made with [Method of Payment]. No goods or services were exchanged for your contribution.
Your donation will help us to [insert details on how the donation will be used]. We could not do this important work without the support of donors like you.
We are so grateful to have supporters like you who believe in our mission and are committed to making a difference in the world.
Sincerely,
[Name], [Title]
[Non-Profit Organization]
Example #2: With an unreimbursed expense
Dear [Name of the donor],
Thank you for your cash contribution of 10 admission tickets to [an event or venue] valued at $300.
[Non-Profit Organization] received this donation on [date of receipt]. No goods or services were provided in exchange for your contribution. Please retain this letter for your tax records.
Thank you again for your support in [Your social cause].
Best regards,
[Name], [Title]
[Non-Profit Organization]
Example #3: With free annual membership (with goods or services provided)
Dear [Name of the donor],
Thank you so much for your generous donation of [amount] to [Non-Profit Organization]. Your support is truly appreciated and will make a significant impact in the work that we do.
As a token of our appreciation, we are pleased to offer you an annual free membership to [Non-Profit Organization], with a fair market value of [amount].
Your donation will help us to [insert details on how the donation will be used]. We could not do this important work without the support of donors like you.
With warm regards and gratitude,
[Name], [Title]
[Non-Profit Organization]
FAQs
Should a donor acknowledgement letter be a hard copy only?
According to IRS, donation acknowledgement letters are acceptable in the form of a hard copy or email.
Should you send donation acknowledgment letter to all donation amounts?
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.
Should you send a donation acknowledgement letter to online donations?
It is appropriate to send the donors acknowledgement letters for online donations, which should be treated similarly to cash donations.
Are all donations tax deductible?
In the United States, a single contribution of $250 or more can claim a charitable contribution on their federal income tax returns.
