How to Issue Donation Receipts for Different Types of Gifts

Fundraising is made of many moving parts, from promoting your nonprofit’s mission to hosting events that inspire gifts, to stewarding donors and forming long-lasting connections. Within each of these parts are thousands of steps to take that are all essential to your nonprofit’s long-term success.

However, before you can worry about these important tasks, you have to start with the basics: ensuring that your nonprofit complies with government rules and regulations. A key part of this is issuing donation receipts for gifts your organization receives.

Let’s discuss how your organization should handle issuing donation receipts.

Understanding Donation Receipts

A donation receipt is a document that a registered nonprofit—501(c)(3) status in the U.S.— provides to a donor as a confirmation of their charitable gift. Since gifts to registered nonprofits are tax-deductible, the donor must use this receipt to claim their contribution as a deduction on their tax return. In the event of a tax return audit, the receipt will provide proof that they made the gift.

The IRS requires donation receipts to cover the following information: 

• Nonprofit’s name and EIN
• Amount of cash contribution
• Statement that no goods or services were provided in return by the organization
• Description and estimate of the goods or services the organization provided in return for the contribution (if applicable)
  Statement that any goods or services that the organization provided in return for the contribution consisted entirely of intangible religious benefits (if applicable)

Although the IRS only requires a tax receipt for donations over $250, it’s still a best practice to issue them for all donations. According to ThriftCart, you can add other information to your tax receipt, such as dedicated thank-you messages and impact statements, to use it as a donor stewardship tool.

Donation Receipts for Different Types of Gifts

Nonprofits nowadays accept many different types of gifts, each of which requires changes to your donation receipts. Here are a few common gifts your organization might accept and how your receipts should change alongside them:

• Monetary gifts: These are your standard gifts of cash. Receipts for these donations can simply follow the guidelines listed in the previous section.
• In-kind gifts: Certain nonprofits accept in-kind gifts of goods. In particular, nonprofit-owned secondhand stores or thrift stores may frequently accept these items and need to issue dedicated receipts for them. Donation receipts for this type of gift need a field for donors to fill out where they describe the item and provide a good-faith estimate for its value.
• Gifts of stock or securities: Finance-savvy donors may donate gifts of stocks or securities to lower their capital gains tax burden. Donation receipts for these gifts should state the type of stock donated (including its ticker symbol), the quantity donated, and the date of the transfer.
• Planned gifts: These gifts are usually pledged by a donor and realized upon their passing. While your instinct might be to send them a donation receipt when the gift is pledged, you should actually plan to send the receipt to the donor’s estate after the gift is realized. The specific fields and guidance for the receipt depend on what the donor has pledged as their planned gift.

If your nonprofit is interested in accepting other types of gifts, such as real estate or cryptocurrency, be sure to research relevant donation receipt requirements to stay in compliance with government regulations.

Best Practices for Managing Donation Receipts

Creating and sending donation receipts is just another step in the already hectic nonprofit workflow. However, there are ways to streamline the process and ensure your receipts follow the necessary guidelines.

Take a look at these best practices for managing your receipts:

• Issue receipts promptly. It’s best practice to issue receipts within 48 hours of the gift so donors can quickly receive proof of their donation and add it to their files.
• Make receipts easy to understand and read. Use a clean layout and legible font. Beyond improving readability, a well-branded design will support your nonprofit’s professional image, earning more trust in your mission.
• Incorporate impact statements. Donors want to understand exactly what their funds are being used for. An impact statement tells them exactly that, helping supporters connect emotionally to your mission.

Some organizations may find it helpful to invest in software that helps them handle their donation receipts. For example, nonprofit-run thrift stores might purchase a point of sale (POS) system that has donation receipt capabilities within it to handle both sales and accepting large volumes of in-kind gifts. Other nonprofits that follow a more standard donation workflow may use donor management or fundraising software to handle receipts instead.

Implement a system for issuing donation receipts to comply with local and federal regulations and ensure your organization keeps its nonprofit status. But don’t miss the opportunity to use it as a form of stewardship for your supporters! When donors feel appreciated for their generosity and see the impact they’re making, they’re more likely to support your mission for the long term and participate in other major campaigns and fundraising events.