What Is a Donation Receipt and Why Do You Need One?

A donation receipt serves as an official acknowledgment from a charitable organization confirming a contribution. This document provides a formal record of a gift, whether monetary or non-cash. Its purpose is to document the voluntary transfer of assets to a qualified organization. Nonprofits typically provide these receipts to the donor, serving as proof of the transaction.

Understanding the Role of a Donation Receipt

Donation receipts primarily substantiate charitable contributions for tax deduction purposes. The Internal Revenue Service (IRS) requires proper documentation for individuals to claim deductions on their federal income tax returns. A valid receipt acts as proof of the donation, which is essential for a donor’s records and in case of an IRS audit. Without adequate substantiation, a claimed deduction may be disallowed.

Essential Information for a Valid Donation Receipt

For a donation receipt to be valid for tax deduction purposes, it must contain specific information. It needs to clearly state the charitable organization’s name and the date the contribution was made. For monetary contributions, the exact cash amount should be noted. If the donation is non-cash, the receipt must include a detailed description of the property, but not its monetary value, as the donor is responsible for determining the value of non-cash contributions.

The receipt must also include a statement indicating whether the organization provided any goods or services in return for the contribution. If no goods or services were provided, the receipt should explicitly state this. If goods or services were received, the receipt must provide a description and a good-faith estimate of their value. Including the organization’s Employer Identification Number (EIN) is considered good practice.

Specific Receipt Requirements for Different Donation Types

Receipt requirements vary based on the type and value of the donation. For cash contributions, a written acknowledgment from the charity is required for any single contribution of $250 or more. For cash donations under $250, a bank record, such as a canceled check, bank statement, or credit card statement, can often suffice as proof.

For non-cash contributions, a written acknowledgment from the charity is also necessary if the value of the single item or group of similar items is $250 or more. This acknowledgment must describe the donated property. Special rules apply to certain non-cash items, such as vehicles, boats, or aircraft, which typically require a specific acknowledgment from the charity on Form 1098-C. The value of services, such as a volunteer’s time, is not deductible as a charitable contribution.

How to Obtain and Maintain Your Donation Receipt

The charitable organization is generally responsible for providing donors with a donation receipt. Donors should request a receipt if one is not automatically provided, and many organizations send year-end statements summarizing all donations. The acknowledgment should be received by the donor on or before the earlier of the date the donor files their tax return for the year of the contribution or the due date, including extensions, for filing that return.

Maintaining these receipts is important for tax purposes and potential IRS review. Donors should keep these documents with other tax records. It is generally advisable to retain tax records, including donation receipts, for at least three years from the date the tax return was filed. However, for significant underreporting of income, the IRS may have up to six years to initiate an audit, so keeping records longer can be a prudent approach.