When issuing a donation receipt, it is best to create and adhere to certain guidelines. This is essential to enhance the donor experience while also ensuring that you never miss any critical information. Information like how and when to issue a donation receipt will help convey your appreciative intent to donors.
- It is best to send a written recognition for all gifts.
- Organisations should respond to donation receipt requests from donors.
How to Issue a Donation Receipt
Donation receipts should never be issued on their own because sending them is an important aspect of excellent donor stewardship. Hence, always include a thank-you message with it, whether you’re sending a paper copy or a digital one; this makes the communication’s goal less transactional. With that being said, we will go ahead to discuss the process of issuing a donation receipt.
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Issue Printed Receipts
Printed receipts are frequently included as a tear-off piece at the bottom of thank-you letters. Include a handwritten note or card with the receipt even if you are not sending a thank-you letter.
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Assign a Receipt Number
On that topic, always assign a special ID number to each receipt you issue and keep copies of them. It will be simpler to locate them if donors need another copy.
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Allow Options
Allowing donors to select the option that best satisfies their demands will help you understand their preferences regarding whether they would prefer individual or consolidated receipts.
When is a Donation Receipt Required?
To begin with, producing formal donation receipts is not subject to any regulations. You may decide to send out receipts before the end of the year. Also, sending out donation receipts in January of the following year isn’t a bad idea as well.
However, donors want a “thank you” for their donation. It doesn’t matter the size of their gesture, they anticipate receiving prompt appreciation. Hence, a donation receipt should be sent out between 24 and 48 hours after the donation is made. Also, the process of issuing donation tax receipts can be automated to fast-track the process.
In the following circumstances, the IRS demands donation receipts:
- For single contributions over $250.
- If a donor received products or services in return for a single donation that was more expensive than $75.
- When a donor requests a receipt for their donation.
- For donations under $250
Note, that there is no legal necessity for gift acknowledgements. There are certain exemptions where the donor receives something of value in exchange for the donation. In such cases, there are unique requirements for “quid pro quo” contributions.
In addition, a licensed appraisal must appraise donations that are more than $5,000 in value. This is done before the donor can deduct it from their taxes. Failure to send a receipt can result in fines of up to $5,000 for each campaign and $10 for each donation.
Also, a combined receipt for recurring gifts should be given at the end of the year. This ought to be done no later than January 31st as it allows donors to have everything they need to start completing their taxes.
Likewise, if a donor joins your nonprofit on an annual basis and receives goods or services worth $75 or less in return, they do not require a receipt.
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Issue Receipts for Cash Donations
It is a recommendation to always provide official receipts. Regardless of the donation amount, contributors would probably request them even for gifts under $250. Most organisations establish their thresholds to streamline workload management. As an illustration, they only provide receipts for contributions of $20 or more.
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Recognise All Gift Donations
It is best to send a written recognition for all gifts. This also includes gifts that fall below the threshold. Be sure to include the donor’s name, gift amount, and date. A good option is to send an automatic email. You can send the email as soon as the donor fills out the form on your donation page. The mail should be delivered upon confirming the money. In this manner, the donor can still deduct this donation from their taxes if they so desire.
Conclusion
To sum up, donation receipts are crucial for tax purposes and accountability. Hence, nonprofits should issue them following appropriate guidelines to show transparency in charitable endeavours.
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