Gift acknowledgment letters can be the backbone of a successful fundraising program. By thanking donors and telling them their gift is appreciated, you’re taking an important step toward building a relationship. Moreover, an acknowledgment letter is an important record for the donor and fulfills your obligation to the IRS.
Here are 10 basic tips for creating an acknowledgment letter template that provides the required information to the donor while expressing gratitude and appreciation. Note: Acknowledging gifts requires that you keep good records of your gifts and donors. If you need some tips on how to do that, first check out this post on the fundamentals of gift entry.
Tip #1: Although the IRS doesn’t require acknowledgment letters to be sent for gifts under $250, it’s a good rule of thumb to express thanks for every gift, regardless of its size.
Tip #2: In order for a donor to claim a tax deduction of $250 or more, the IRS requires non-profit organizations to send a letter including the organization’s name and a description of the donation. For a gift of cash (whether given by check, credit card, etc), list the amount of the gift. For a non-cash gift, including gifts of stock, provide a description. Without a letter of this nature, a donor cannot claim a deduction.
Tip #3: Your letter needs to include the date the gift was received.
Tip #4: If the donor did not receive any goods or services in exchange for their gift, include a sentence stating that. If they received goods or services, you’ll need to say so. Common examples of this are when a donor purchases a ticket to an event: If the ticket cost $100 and they received a dinner valued at $25, the deductible amount of their gift is $75. You can review the IRS guidelines here.
Tip #5: Include a statement that your organization is a tax-exempt non-profit organization recognized by the IRS under Section 501(c)(3).
Tip #6: If the donor made an in-kind gift, provide a description of the item(s) donated but do not include an estimate of the value. It is the donor’s responsibility to seek the fair market value.
Tip #7: If your organization receives a gift made through a Donor Advised Fund such as Fidelity Charitable, you must handle the acknowledgment differently. We’ve put together detailed instructions and sample text for you here.
Tip #8: When acknowledging tribute gifts (gifts made in honor or in memory of someone), it will mean a lot to the donor if the tribute is mentioned in your acknowledgment letter. This resource gives you guidance on how to craft an acknowledgment letter for a tribute gift.
Tip #9: It’s important to send your thank-you letter promptly after a gift is made. Some fundraising experts recommend sending an acknowledgment within 24 hours of receiving the gift. If that time frame isn’t realistic for your staff, aim to send an acknowledgment out no longer than two weeks after receiving a gift.
Tip #10: Establish a donor-centric tone in your acknowledgment letter.
Following the ten guidelines listed above will help you craft acknowledgment letters that inform and thank your donors. By properly acknowledging their gifts, you’ll be on your way to retaining them.
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