How to Write a Receipt for a Donation

Donation receipts are official documents provided by charitable organizations to donors, serving as crucial proof of contributions for both parties and supplying details for potential tax deductions. They also provide recipient organizations with a formal record of incoming support, important for internal financial management and regulatory compliance.

Essential Information for Donation Receipts

A valid donation receipt for tax purposes must contain specific information, including the charitable organization’s name and Employer Identification Number (EIN). This identifies the recipient as a qualified 501(c)(3) public charity, essential for the donor’s deduction. The receipt must also include the donor’s full name and the precise date the contribution was received. Accurate dating is particularly important, especially for year-end donations, as the contribution date is when the donor relinquishes control of the funds.

For cash contributions, the exact amount of the donation must be stated on the receipt. If the donation is a non-cash item, the receipt should provide a detailed description of the property, but without assigning a monetary value. This is because the donor, not the organization, is solely responsible for determining the fair market value of non-cash contributions. A statement indicating whether the organization provided any goods or services in return for the donation is also required. If no goods or services were provided, the receipt should explicitly state this.

Should any goods or services be provided in exchange for the donation, their description and a good faith estimate of their fair market value must be included. This is known as a “quid pro quo” contribution, and the donor can only deduct the amount of their contribution that exceeds the value of the goods or services received. For instance, if a donor gives $100 and receives an item valued at $40, only $60 is deductible. This disclosure is required for contributions exceeding $75 where a benefit is provided, limiting the donor’s tax deduction to the amount exceeding the benefit’s value.

Specific Considerations for Non-Cash Contributions

Non-cash contributions, also known as in-kind donations, involve gifts of property rather than money, such as vehicles, real estate, securities, or household items. While general receipt requirements apply, additional details are necessary to document these gifts. The receipt should include a detailed description of the donated property, providing enough information for someone unfamiliar with the item to identify it. For securities, this includes the name of the issuer, the type of security, and whether it is publicly traded.

Donors are responsible for determining the fair market value (FMV) of their non-cash contributions. For non-cash contributions exceeding $500, the donor needs to file IRS Form 8283, “Noncash Charitable Contributions,” with their tax return. This form requires details such as the property’s description, the date acquired, and the donor’s cost or other basis. For donations exceeding $5,000, a qualified appraisal from an independent appraiser is required for the donor’s tax purposes, and the organization may need to acknowledge its receipt on Form 8283, Section B.

The organization’s receipt must describe the asset received without assigning a value, as valuation is the donor’s responsibility. The organization’s receipt provides descriptive information the donor will use to complete their tax forms. This clear distinction helps ensure compliance with IRS regulations, preventing potential issues for both the donor and the organization.

Methods for Providing Donation Receipts

Charitable organizations have flexibility in how they generate and deliver donation receipts. Receipts can be created using various methods, including word processing software with templates, specialized accounting software, or online donor management platforms. Many platforms can automate the process, sending immediate email confirmations with attached receipts upon a donation. Physical mail is also a common method for sending formal acknowledgment letters.

The timing of receipt delivery is important for donor tax compliance. For single contributions of $250 or more, organizations are required to provide a written acknowledgment to the donor. This acknowledgment should be provided by January 31st of the year following the donation for gifts made in the prior calendar year. Providing receipts for all contributions, even those under $250, is a best practice that promotes goodwill and aids donors in their record-keeping.

Organizations should maintain detailed records of all donations, both cash and non-cash, in a secure and organized manner. This includes keeping copies of all issued receipts. Utilizing a robust donation management system can streamline record-keeping, facilitating efficient tracking and retrieval of donation data for financial reporting and potential audits. Regular internal reviews of receipting practices help ensure accuracy and compliance with tax regulations.