What is a donation receipt?
A donation receipt is a formal document or acknowledgment from a nonprofit to a donor. Typically, it includes important details about the transaction, such as the amount donated, the date, and the donor's name.
For accurate bookkeeping, both the donor and the nonprofit keep this record—this helps donors for tax reasons and helps nonprofits keep track of their donations.
When is a nonprofit donation receipt required?
The IRS requires nonprofit donation receipts when a donor makes a charitable contribution of $250 or more. In these cases, nonprofits must provide a receipt to comply with IRS regulations and allow the donor to claim a tax deduction.
However, sending donation receipts is generally a best practice for nonprofits too, regardless of the amount received. Aside from maintaining accurate records, sending donation receipts is helpful for strengthening donor relationships, too: a donation receipt often serves as a form of acknowledgment and appreciation, helping to encourage future donations.
501(c)(3) tax-compliant donation receipt requirements
For charitable contributions of over $250, the IRS requires that nonprofits send donation receipts that include a few important details:
- The name of the nonprofit organization
- The specific donation amount
- A description of non-cash contribution, if applicable
- A description and estimate of the value of goods or services, if any, that the organization provided in return for the contribution; and
- A statement that goods or services, if any, that the organization provided in return for the contribution consisted entirely of intangible religious benefits, if that was the case.
What’s the best format for your donation receipt?
The best format for a donation receipt depends on your organization's needs and your donors' preferences. However, most nonprofits use one or a few of these options:
- Email: Email receipts are a popular, efficient, cost-effective, and environmentally friendly option for sending donation receipts. Automated donation receipts, in particular, can help organizations reduce administrative effort.
- Platform-based: These receipts are generated and sent through a specific platform or fundraising software. Donors can typically either receive them via email or can access them through a web portal.
- PDF: These receipts can be sent to donors via email or downloaded from a platform. If the donor prefers a physical copy, they can be printed.
- Text message: These receipts are sent via SMS or text message, providing donors with immediate confirmation of their donation. Typically, text receipts are used in addition to email or PDF-based receipts.
- Direct mail: Some donors prefer physical documentation. In this case, mailed donation receipts are a great option, too.
How to create a free 501(c)(3)-compliant receipt for free with Zeffy
Step 1: Create a free Zeffy account
First, create a free Zeffy account
Once you log into the Zeffy dashboard, hit "Settings."
- Canadian nonprofits: Make sure you've selected that you're a registered charity and entered your charity number. Don't forget to upload a signature and your logo.
- American nonprofits: Choose the option that you're a 501(c)(3) organization and enter your EIN. Upload your logo, too!
Step 2: Turn on automatic tax receipt generation
Next, it’s time to turn on automatic tax receipts.
- For fundraising campaigns: If you're setting up for donations or fundraising campaigns, head to "My Forms" and pick the form you want to activate automatic tax receipts for. Click "Edit", then in the form settings, check the box to "Generate automatic tax receipts".
- For memberships, events, and other fundraising methods: Head to "My Forms" again, pick your form, and hit "Edit". Look for the "Tickets" section and click "Options" under each ticket. There, you'll see an option to generate a charity receipt. Check that box and specify the amount eligible for a tax receipt.
Step 3: Send donation recipes for free!
And that's it! Your donors will automatically receive their tax receipts with their confirmation emails. If they need another copy, they can request it through their dashboard.
Learn more about how to set up free donation receipts with Zeffy
Year-end donation receipts
Why send a year-end donation receipt?
Sending a year-end donation receipt is important and powerful for a few different reasons — for both nonprofits and their donors:
- Tax deductions: Many donors rely on their donations to claim tax deductions when filing their taxes. Providing a year-end donation receipt ensures they have the necessary documentation to claim deductions on their tax returns.
- Donor stewardship: Sending a year-end donation receipt is a great opportunity to express gratitude to your donors for their generosity throughout the year. It shows that you value their support and helps strengthen your relationship with them.
- Last-minute donations: The end of the year is the most profitable for nonprofits — 17-20% of the average nonprofit’s revenue is raised in December. By sending a donation receipt and thanking donors, you might inspire another last-minute gift.
How to send year-end tax receipts
Sending year-end tax receipts to donors can be done efficiently using the following steps:
- Compile donation information: Nonprofits typically gather this information using a CRM.
- Prepare receipts: Generate individual year-end tax receipts for each donor with essential details such as the donor's name, donation amount, donation date, and a statement confirming your organization's tax-exempt status.
- Choose a delivery method: Options include email, postal mail, or providing access to digital receipts through an online donation platform.
- Keep records: Maintain detailed records of all tax receipts sent to donors for your organization's records and future reference. This helps with audit trails and ensures compliance with IRS regulations.
Zeffy automatically re-sends a year-end summary of your donors' tax receipts for the previous year
You can rest assured that we handle the distribution of receipts on your behalf, eliminating any need for you to manage this task.
- All eligible donors from the preceding year will receive their tax receipts via email.
- The email sent from Zeffy will include each of your donor’s receipts for payments made through Zeffy in the previous year. This includes receipts from other organizations that use Zeffy, ensuring that your donors are able to access all of their tax receipts in one single document, making it easier for them.
- For one-time payments through Zeffy, your donors have already received a copy of their receipt. For monthly recurring donations, we will be generating these automatically in January. Both types of receipts will be sent out by January 31st.
- Donors are also able to access all of their receipts from their Zeffy donor account.
Here is what the email and receipts will look like:
Sample 501(c)(3) Donation Receipt (Free Template)
[Your Nonprofit Organization Letterhead]
[Date]
[Donor Name]
[Donor Address]
[City, State, ZIP Code]
Dear [Donor Name],
I hope this letter finds you well! I wanted to take a moment to express our heartfelt gratitude for your recent donation of [donation amount] to [Your Nonprofit Organization Name]. Your support means everything to us and truly makes a difference in our mission to [briefly describe your organization's mission or cause].
Below please find a donation receipt for your records:
Donation Date: [Date of Donation]
Donation Amount: [Amount of Donation]
Description of Donation: [Brief description of the purpose or designation of the donation, if applicable]
I also want to remind you that [Your Nonprofit Organization Name] is recognized as tax-exempt under section 501(c)(3) of the Internal Revenue Code. It's important to note that no goods or services were provided in exchange for your generous donation.
For donors like you who've contributed $250 or more in one donation, please keep this receipt handy for your tax records The IRS requires written acknowledgment for donations exceeding $250 in value to claim a tax deduction.
Once again, thank you from the bottom of our hearts for your incredible support of [Your Nonprofit Organization Name]. We are truly grateful for donors like you who make our work possible!
Warm regards,
[Your Name]
[Your Title or Position]
[Your Nonprofit Organization Name]
[Contact Information: Phone Number, Email Address, Website]
Nonprofit donation receipt FAQs
How do I write a receipt for a donation?
When writing a receipt for a donation, include the donor's name, the date and amount of the donation, a description of the donation, and your organization's information. If the donation exceeds $250, be sure to include all of the necessary IRS information.
What are the IRS rules on donation receipts?
The IRS requires donation receipts for contributions of $250 or more, stating the amount donated and whether any goods or services were received in exchange.
Is it worth it to get a receipt for donations?
Yes, it's worth getting a receipt for donations, especially for larger contributions. Receipts provide proof of donation for tax purposes and help ensure compliance with IRS regulations.
What is proof of donation for tax purposes?
Proof of donation for tax purposes typically includes a receipt from the nonprofit organization, bank records showing the donation, or a written acknowledgment from the charity for contributions of $250 or more.
Send donation receipts for free with Zeffy
Donation receipts are an important part of nonprofit success: prompt, branded receipts sent to donors are great for staying IRS-compliant and maintaining a positive and strong relationship with stakeholders.
With Zeffy, your nonprofit can take advantage of completely free, automated, custom donation receipts. Simple, effective, and easy to use, Zeffy lets your nonprofit manage every part of its operations—from donations to events—without paying a cent.
