IRS Requirement: Charitable Acknowledgement Letter.

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The importance of the charitable acknowledgment letter:


1) Your donor needs it

According to IRS Publication 1771, Charitable Contributions - Substantiation and Disclosure Requirements, donors must have a written acknowledgment from the 501(c)3 nonprofit that receives their donation in order to claim a tax deduction for each charitable contribution that exceeds $250. 


2) The IRS requires it...and requires it to be compliant

The IRS states that written acknowledgments of charitable contributions should include the following:

  • Name of recipient nonprofit
  • Amount of cash donated OR a description (omitting the estimated amount) of the non-cash contribution received
  • As applicable:
    • A statement that the nonprofit did not provide any goods or services in return, if that was the case
    • A description and good-faith estimate of the value (not cost) of any goods or services the nonprofit provided in return (for example, the market value of an event ticket)
    • A statement that the goods or services provided by the nonprofit in return for the contribution were entirely intangible religious benefits, if that was the case
  • What is NOT included in the acknowledgment letter:
    • The cash value if it was a stock gift. If a security was given, IRS guidelines prohibit denoting a cash value.


3) It's a great donor relationship management opportunity

Generally, the burden for obtaining documentation for itemizing charitable deductions come tax time is on the donor. Nonprofits are actually not required to provide written acknowledgments of donations received, except in the case of quid-pro-quo contributions of more than $75. However, organizations can express their appreciation of a donor's gift by providing timely written communications that will substantiate their donors’ tax deduction claims.


Both hard-copy and electronic formats are acceptable as long as the donor receives the acknowledgment by the time they file their return or the time their return is due, whichever occurs first. These acknowledgments are not submitted with donors’ tax returns but are kept on file to prove claims if necessary.


Citation: AICPA


Overflow does not provide tax, legal, compliance, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, compliance, or accounting advice. Your organization should consult its own tax, legal, compliance, and accounting advisors before sending or concluding any transaction, communication, or otherwise.



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