Once the holiday season passes, the work of preparing year-end tax receipts starts for many nonprofit development staff. At the beginning of each new year, our customers frequently ask how best to manage this process in Little Green Light, so we thought we’d offer some guidance on creating your year-end receipts.
Writing your year-end tax receipt letter:
When it comes to drafting your letter, the IRS provides guidelines on what should be included. Here are some of the highlights:
- Receipts must be printed and can be sent by mail or email
- Your letter must include the amount contributed, the date of the contribution, and the name of your organization
- Your receipt must state the value*, if any, that your organization provided to the donor in goods or services for the donation
*Note: In-kind gifts can be included on your year-end statements, but the estimated value or tax-deductible amount of these gifts should not be included. (The IRS recommends against including the value on a tax receipt for in-kind gifts.)
Should my year-end tax letter include a thank you?
Yes! Just because the primary purpose of the mailing is to provide a document that your donor can use as a receipt for tax purposes, that doesn’t mean you shouldn’t personalize the letter—and we recommend that you do! If you’re making the effort to send the receipts, take advantage of this opportunity to let your donors know how much they are appreciated and how their gift(s) benefited your organization. It’s a wonderful stewardship opportunity.
Need inspiration for drafting some of that personalized content? See these tips on writing donor-centered thank you letters, or check out this sample year-end tax receipt letter:
Tip: When designing the letter, keep in mind how many gifts might be listed for some donors. For example, monthly donors will have at least 12 gifts to list. Some LGL users find success by focusing page 1 of the letter on stewardship and letting page 2 of the letter contain the list of gifts only.
Using LGL Merge Fields in your letter:
Little Green Light provides a few merge fields that are useful in the generation of a year-end tax receipt. Our example above uses the following merge fields:
- [[gifts.2017.list]] – To insert a table of gifts that includes deductible amount, gift date, and payment type
- [[gifts.2017.total]] – To insert the total giving amount received for the calendar year
There are a few others you can also use, including:
- [[gifts.2017.count]] – The number of gifts received in 2017
- [gifts.2017.deductible_total]] – The total deductible giving amount for 2017
- [[gifts.2017.list:fund,campaign]] – Use this format to include campaign, fund, appeal, and/or event columns in your table
- [[gifts.2017.custom_list]] – This field is similar to [[gifts.2017.list]], but it has more options. Format is like [[gifts.2017.custom_list:campaign,fund,category]] – Allowed columns include campaign, fund, event, deductible_amount, notes, payment_type, category
Selecting the donors who will receive year-end tax receipts:
Now that you’ve thought through what your year-end tax receipt will look like and what information it will contain, it’s time to choose the constituents who will receive it.
To locate donors who contributed last year, go to the Constituents tab in your LGL account and search for them using the Advanced Search box on the All Constituents page. Here’s an example of the search criteria you might use:
Once you have generated your search results, you can send your mailing to those constituents by clicking the Send mail button to the upper right of the search box.
For complete instructions on creating your year-end acknowledgements in LGL, please read this article in our Knowledge Base.
The practice of sending year-end tax receipts can offer a valuable opportunity to thank your donors. Using the powerful tools that Little Green Light provides can help you produce great letters. And, although this process may take a bit of time on your part, we believe it is an important activity in a stewardship plan and will go a long way toward developing stronger relationships with your donors.