Donor Acknowledgment Letters: What Your Nonprofit Needs to Know

donor-acknowledgment-letter.jpg

Most nonprofit organizations simply would not exist without the support of their donors. The generosity of donors allows many organizations to pursue their mission and bring awareness to their cause. From small online donations to major planned gifts, every donor contribution is important. One common way to acknowledge donors and extend your thanks for their gift is to send a donor acknowledgment letter.

What Is a Donor Acknowledgment Letter?

Donor acknowledgment letters are more than just a "thank you." A formal donor acknowledgment letter includes IRS-mandated content outlining information about gifts in excess of $250 made by individual donors. The letter can be either mailed or emailed, and it may be used by the donor as evidence of their contribution for tax purposes. Since these letters are used as "proof" by the donor, it is important to include the following points in each donor acknowledgment letter:

  • A statement declaring the nonprofit’s tax-exempt status as a 501(c)(3). This statement should also include the nonprofit’s Employer Identification Number so the donor may verify the organization’s status.

  • The name of the donor that made the gift. This is important for the donor's tax filing purposes. You should include the full, legal name of both your nonprofit organization and the name of the donor.

  • The date that the gift was received by your nonprofit. You must send a letter for each individual gift a donor makes - not one combined letter with dates of all gifts made during the year.

  • A description of the donation. For cash gifts, this should be the monetary value of the donation. For non-cash gifts, provide a description but do not attempt to assign it a specific cash value.

In addition to these details, you must also acknowledge if your organization provided any goods or services to your donors in exchange for their gift. (For example, a T-shirt or special event ticket.)

When To Send Donor Acknowledgment Letters

Donor acknowledgment letters should be sent out annually before each year’s tax filing deadline. In general, they should be sent out around January 31st. Many fundraising software tools will generate automated donation acknowledgments. If those tools aren't available to you, your team could also build templates that automatically populate with the correct information. This will save you time at year-end.

Why Should You Send a Donor Acknowledgment Letter?

Donor acknowledgment letters are a great way to remind your donors why they contribute to your organization. A donor acknowledgment letter can be so much more than just a simple statement of the contribution received. It's an opportunity to communicate with your donors and explain how their contribution has helped your cause. In addition to the content required by the IRS, you can also use the letter to highlight your organization’s accomplishments and future goals.