Sending year end donor letters are a big part of gift giving. What happens when you want to return a gift without a receipt? You don’t get the proper credit. This is the same thing for a donor who makes a donation and does not receive an acknowledgment letter for tax deduction purposes. They need a receipt to prove they you gave the gift.
Year end donor letters are the best way to say thank you.
Sending out year end donor letters is the best way to thank your donors and acknowledge how much they have given. It is also necessary in order to meet the IRS requirements for deductions. Year-end is your window of opportunity to connect with donors and show your appreciation for all they have done. This sets the stage for the coming year gift giving.
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Year end donor letters are more than just a thank you note.
A donor acknowledgement letter is more than just a thank you note. As a nonprofit, you must follow specific guidelines. This includes providing donors with a donation “receipt” also called an acknowledgement letter. Donors who give more than $250 must receive a written acknowledgment from a nonprofit to claim that deduction on their individual income tax return. Their is no official IRS form that the nonprofit organization has to complete.
In order to receive credit for the donation, the nonprofit needs to send the acknowledgment by the date that the donor files their individual tax return. Typically, most nonprofits provide written acknowledgment letters by January 31 of the year following the receipt of the contribution.
Here are some basic requirements that must be included in the acknowledgment letter:
- It must include the name of the organization.
- It must include the tax status of the organization, 501c3 tax-exempt.
- It must include the date the donation was received.
- It must be written or printed. No verbal receipts.
- It must include the amount contributed.
- It must state whether the donor received any goods or services for the donation.
Not only is the acknowledgment letter necessary for IRS tax deductions, it can also help raise more money for your organization.
Here are five tips on how to turn a year-end donation acknowledgment letter into the gift that keeps on giving:
Begin with “Thank You”
Show your appreciation and gratitude by writing your acknowledgment letter in the form of a thank you note. You can’t thank donors enough so start out by thanking them for their generosity. You must make your donor feel like a valued friend.
Segment Donors
Keep it personal. Send letters tailored for who you are writing to. It is important not to send an impersonal letter possibly more than once to the same person who supported your organization by attending an event and also contributed throughout the year. Segmenting also helps you find the ideal way to communicate based on the generation of the donor.
Keep it Simple and Conversational
Speak to the donor as a person. Don’t include wordy jargon. Be straightforward and informal enough to seem friendly and personal. Make sure you use the word “you” instead of “I, me or my” to help shift the focus on your donor and less on your organization.
Tell a Story not Statistics
Tug on your donor’s heartstrings and tell the story about what a difference they made for your organization. Include not only how they were a big part the of mission, but how they can continue to be a part of making a difference.
Don’t Forget to Ask
Don’t forget to ask them to continue making a difference as a donor.
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Bottom Line
A year-end donor acknowledgment letter will go an extremely long way if you follow this advice.
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Did you find this article useful? We welcome your thoughts and comments.
We are a new 501(c)(3) organization. Now at years end I need to send out receipts in a manner that is compelling, not labor intensive and personal. I am dealing with two groups. One of them is donations by check, for which I would have addresses. The second group is Paypal contributors. For them I have only email addresses. I need help. My organization Facebook page can be found at Okandogs.com.
Tom:
A software application like FastFund Online from Araize can help. You can create a customized year end donor receipt with a personalized message to each donor thanking them for their donation and how their donation helped your organization facilitate the adoption of dogs. You can easily separate the donors who receive a printed mailed receipt from those who receive an email receipt. The email receipts can be sent out in bulk in one easy step. For more information, go to Araize.com.
Do year end donor receipts need to be paper? Or can we do them electronically because of the pandemic?
Jay,
No, you do not have to print and mail year and donor receipts. You can email the receipt to the donor.
If donors get a receipt immediately after their donation throughout the year, are year-end statements required?
Jami,
No, you do not have to send year and donor receipts, if you are sending receipts for individual donations.
A year end donor receipt is great public relations for your organization to communicate to the donors how important their donations during the year helped your organization perform its mission. It also is an opportunity to ask for a new donation.
Happy and safe New Year !
Joe Scarano