What if one of your most common donor communications is also your most overlooked?Â
Whether someone is bidding in your fundraising auction or making a simple online donation, they expect a receipt. While the core purpose of a donation receipt is to confirm and provide proof of a contribution, it can accomplish much more than that. In fact, it’s a critical touchpoint that can greatly strengthen a donor relationship.
By carefully considering the formatting and content of your donation receipts, you can foster trust with donors and give them everything they need to continue supporting your nonprofit.
Let’s walk through how to transform a standard donation receipt into a powerful tool for engagement. You’ll learn the essential components every receipt needs and how to add a human touch that makes donors feel truly valued.
Why Your Donation Receipts Matter More Than You Think
If someone donates money or in-kind gifts valued at over $250, your nonprofit is legally required to issue a donation receipt. However, it’s also good practice to issue receipts for all gifts, regardless of size.
A generic, purely transactional receipt meets the basic requirement but misses some huge opportunities. Here’s how ThriftCart’s guide to donation tax receipts breaks down the benefits of a well-designed receipt:
- Ensure legal compliance. Proper donation receipts help your nonprofit meet IRS requirements, allowing you to avoid penalties and maintain your tax-exempt status.
- Comply with grant requirements. Many grantmakers require accurate donation records. Issuing clear receipts demonstrates financial responsibility and improves your chances of securing future grants.
- Enable donor tax benefits. Donation receipts provide the necessary documentation for donors to claim tax deductions on their charitable contributions, a key incentive for giving.
- Exercise transparency. A detailed receipt builds trust with donors by documenting each donation and showing how funds are managed. Details like your nonprofit’s employer identification number (EIN) help donors verify your legitimacy and reinforce their confidence in your organization.
- Retain more donors. A donation receipt is often the first communication a donor receives after making a gift, setting the tone for the entire relationship. Beyond acknowledging one-time gifts, continuing to send tax receipts to recurring donors shows that their ongoing support is valued.
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In short, a well-crafted receipt safeguards your organization and strengthens your relationships. By treating your receipts as more than just an administrative task, you transform them into a powerful tool for building a stable, trusted, and well-funded organization.
Essential Elements To Include in Your Donation Receipt
To experience the benefits outlined above, you must include the right information in every receipt you send. Let’s walk through the essential elements of a compliant and donor-friendly receipt.
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Your Nonprofit’s Information
Include your organization’s full legal name and EIN on your donation receipts. This proves your legitimacy and assures donors that their contribution was made to a registered charitable entity, ensuring it is eligible for a tax deduction.
While that’s all that’s legally required, build even greater trust by adding your current mailing address, phone number, and email. Including contact information makes your organization feel accessible and shows donors you’re available to answer any questions they might have.
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The Donor’s Information and Donation Details
Be sure to incorporate the donor’s full name, the date of the gift, and the amount that was given (if monetary). These details validate the receipt for the donor’s tax purposes. The IRS also requires you to provide:
- A statement that your organization didn’t provide goods or services in exchange for the donation.
- Alternatively:
- A description and good-faith estimate of the value of goods or services your organization provided in return.
- A statement that the goods or services your organization provided in return consisted entirely of intangible religious benefits.
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Chazin & Company’s guide to in-kind donations explains that if the donor gave an in-kind gift, it’s up to them to estimate the fair market value. On your end, simply provide a description of the items or services that were donated.
For example, let’s say your nonprofit opens a thrift store to raise funds for its mission. If a donor drops off a large bag of clothing, your receipt shouldn’t try to guess the value. Instead, it should provide a clear description of the donation. You might list that their non-cash contribution included five women’s blouses, three pairs of women’s pants, one winter coat, and two pairs of women’s dress shoes. You should also leave space for the donor to fill in their estimate of the donation’s value.
This provides the donor with the official documentation they need while leaving the valuation responsibility to them.
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Unique Receipt ID
Assign a unique identification number to each receipt. Note that this is not a government-issued identification number like your EIN. Instead, this number helps with your internal record-keeping and makes it easy for your team to find the contribution if the donor ever follows up or if your organization gets audited.
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Going Beyond the Basics To Strengthen Trust
Meeting technical requirements is just the start! The moment someone gives is when donor engagement reaches its peak, making it the perfect time to reinforce trust, build passion for your cause, and kickstart a lasting relationship.
To make your receipt a memorable and trust-building tool, infuse it with genuine gratitude and a sense of impact. To do that, incorporate:
- Your nonprofit’s branding: Give each receipt a professional look by including your nonprofit’s logo, tagline, colors, and fonts.
- An impact statement: Think of this as a simple form of impact reporting that connects a donor’s gift to your mission. Reference concrete outcomes that the donation supports. For example, you might say, “Because of you, a rescued animal will receive a warm bed, a full bowl, and the veterinary care they need to get a second chance at a happy life.”
- Additional calls to action (CTAs): Inspire future support by encouraging donors to stay involved. Invite them to follow your nonprofit on social media, sign up for your newsletter, or attend an upcoming event.
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Timeliness is also a crucial factor. It’s best practice to issue donation receipts within 48 hours to provide donors with immediate confirmation and proof of their gift. Sending receipts promptly reassures donors that their gift is in good hands.
Using fundraising software is the easiest way to automate receipts. The moment someone gives online, your platform should instantly generate and send a personalized e-receipt.
Make sure any software you use to collect donations makes it easy to issue receipts. For example, your thrift store’s point of sale (POS) system might enable your organization to track donation dropoffs and create e-receipts on the spot, or your auction software might automatically generate itemized receipts for winning bidders that distinguish between an item’s fair market value and the tax-deductible portion of their payment.
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Don’t let your donation receipts be an afterthought. Treat them as the vital stewardship tool they are: a thank you, a confirmation, and an invitation to a deeper relationship.
Take a few minutes to review your receipt template. A few small adjustments can make a significant difference in how your donors perceive their relationship with your organization.
