December 17, 2013 | by Brianna McKinney
I’ve both written and been the recipient of thank you notes from nonprofit organizations. While the IRS requires that 501(c)(3)s distribute gift acknowledgment letters, I was recently taking a look at the ones I’ve received over the years and while most of them were kept mainly for tax purposes, a few stand out.
What the IRS Requires
IRS regulations require that before a donor may claim a tax deduction for a charitable contribution the donor must have a bank record or a written communication from a
All gift acknowledgements should contain:
- A statement that the nonprofit is a charity recognized as tax-exempt by the IRS under Section 501(c)(3); The amount donated (if cash or cash equivalents); or
- A description of the property donated (it is best not to assign the property any cash value in your letter);
- The date the donation was received;
- A statement whether or not your organization provided any goods or services in return for the donation, such as, “No goods or services were received in return for this gift”; or
- If the gift was of $75 or more and the nonprofit did provide something of more than insubstantial benefit in return for the gift, (such as tickets to a special event or a dinner) then the charity must include a good faith estimate of the value of the goods/services provided (such as the market value of tickets to the event or the actual cost of the dinner – even if it was donated to the charity.)
Go Beyond Gift Acknowledgment
Here’s a list of 5 elements of a good nonprofit thank you letter that can help your organization go beyond tax obligations and make a lasting impression.
- Speedy Delivery. Get thank you letters in the mail between 2 days and 1 week of receiving a monetary or in-kind gift. Don’t wait until the end of the year or until tax season!
- Personalized. Use the donor’s name. If more than one person made the donation, include both names. A mistake some make is addressing the letter to the husband when the wife is the one who made the donation. When in doubt, include all names in the household. For regular or “VIP” donors, have your Executive Director hand-write an extra note of thanks on the letter for an added touch.
- Reiterates the Cause. Remind your letter recipient what his or her donation will be used to achieve. Create an emotional tie between money and service.
- Communicates Value. Include the percentage of each dollar that goes directly to activities that support your organization’s mission.
- Deepens Engagement. Invite your donors to stay up-to-date with your organization’s good work and perhaps get more involved by including information for e-newsletter sign-up, social media accounts, upcoming events, etc.
Go beyond taxes and use gift acknowledgments as an opportunity to communicate with and further engage your donor base. By expressing your gratitude in a timely and personalized manner, your letter will make a lasting impact in your supporters’ minds and hearts.