Creating End of Year Tax Receipts

The New Year has begun, and for most non-profits the busiest and biggest donation month has ended. All of the Thanksgiving, Christmas, and Year End appeals have been polished off. Time to sit back and relax right?

Well, not quite. For me January is always the busiest month of the year because this is when end of year donation receipts are sent out to donors. So I spend January pouring over our donor database correcting addresses, making sure donations are all recorded correctly, and getting everything set up with the printer and mailing house.

Now you don’t have to send out donation receipts. There is no law that requires non-profits to send them out unless the donor specifically requests. So you could save some time and money by not sending them out unless requested, or if during the year you included donation information on their thank you letter you can skip this.

I personally like to send end of year summaries to donors. It’s a good way of reminding them how much they have given and even if they aren’t going to use it for tax purposes most people seem to appreciate it.

There are two key aspects to every good donation summary letter. It must meet the IRS requirements for a donation receipt. And it must help maintain your connection with the donor.

Here’s a quick summary of the requiremnts listed in the IRS Publication 526 – regarding charitable contributions.

  • 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
  • It must include the name of your organization
  • It must include the date of contribution

Other than these five things the letter can contain anything you want. I suggest a warm thank you and a nice note saying how happy you are to continue working with them through the next year.
Donation Receipt FAQ

Should a donation be recorded on the date received or the date on the check?
According to IRS Publication 526, p13, a donation should be recorded “at the time of it’s unconditional delivery.” In other words if it’s hand delivered then at the time of delivery. If it’s mailed by check then on the date of mailing, which would be the postmark date.

What should a donation receipt look like?
Anything you want. As long as you include the 5 items listed above. Make it fit the image of your organization. If you want to get fancy you can turn it into a 4 page appeal letter. If you want to save money it can be just one page. I suggest something similar to your letter head. Check out this sample End of Year Tax Summary for some ideas.

How do I value in-kind donations?
Don’t! You are in the business of helping people not estimating product worth. It is the donors responsibility to estimate the value of the items for tax purposes. All you have to do is list a description of the item. Leave the heavy work up to the donor.

If I included donation info on thank you letters for each donation do I still need to send a year end summary?
No. If your thank you letter contained all five of the points above you do not need to send a year end summary.

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