What Is a Donation Acknowledgement Letter?

Passionate donors make your nonprofit initiatives possible. And while supporters might not ask for anything in return, there’s one thing you can always provide your donors: a donation acknowledgment letter. Today, we’ll show you how to put one together.

Donation acknowledgment letters go beyond confirmation and gratitude—the Internal Revenue Service (IRS) legally requires them. But don’t worry—we’ll explain everything you need to know about donation acknowledgment letters to make your donors feel appreciated while satisfying your legal obligations. 

First, let’s get on the same page about what a donation letter is before getting into deadlines, required information, and best practices.

What Is a Donation Acknowledgement Letter?

Understanding how to get donations is important, but knowing how to show donors your gratitude is just as vital to the success of your fundraising campaign. A donation acknowledgment letter (sometimes called a donation receipt or thank-you letter) is an email or paper that recognizes a charitable contribution. At a bare minimum, it’s a confirmation receipt to your donors acknowledging you’ve received their donation.

However, your donation acknowledgment letters should do more than acknowledge charitable gifts. Take the opportunity to show your gratitude and let the donor know the value of their charitable donation. Make them feel special and seen.

Our Why America Gives report found that 48% of donors are most encouraged to repeat a donation after the charitable organization provides updates on where their money makes an impact. Your donation acknowledgment letters are a great place to show donors how they play a part in your larger goals and mission. Use stories, pictures, and videos to illustrate the impact they helped make.

And while one-off donations are great, you want to do everything you can to turn your donor into a recurring giver—and your acknowledgment letter plays a big part in that process.

Donation acknowledgment letters aren’t just for saying “thank you,” though. Your donors need the documentation when filing their tax deductions, and the IRS has strict requirements for what the letters should include (more on that later). 

You’ll also want to send acknowledgment letters to your donors, regardless of how they gifted your nonprofit:

• Cash donations
• Online donations
• Donated goods/Non-cash gift
• Donated services
• Gift cards
• Stock donations
• Legacy donations

Do You Need to Acknowledge Every Donation?

Legally, no. You only have to send acknowledgment letters to donors who gave a single contribution of $250 or more. And it’s up to you whether you want to acknowledge donation by donation or with a single end-of-year acknowledgment letter that sums up all the donor’s contributions. We recommend sending both. 

Acknowledging each donation gives you an additional opportunity to show your gratitude to donors. It also serves as immediate confirmation. At the same time, the year-end acknowledgment letter is an excellent opportunity to summarize your donor’s charitable giving and highlight what it helped accomplish. For tax purposes, having a single document that outlines each charitable donation is much simpler for donors than digging through their mail or email accounts to find the individual receipts.  

But what about all your other donors who donated less than $250? Should you send them donation acknowledgment letters?

Absolutely.

While fulfilling a legal requirement, acknowledgment letters also are the perfect opportunity to show your donors gratitude and confirm you’ve received their donation. Every donation counts, so don’t let any of your donors’ good deeds go unrecognized. 

What’s the Deadline for Sending Donation Acknowledgments?

There’s no formal deadline requirement, but sending your year-end donation acknowledgments before January 31 of the year following the donation is best practice. Sticking with that time frame gives your donors adequate time to submit their tax returns on their schedule. 

As for individual donations, we recommend sending acknowledgment letters as soon as possible. It’s an immediate opportunity to complete the feedback loop and show your gratitude to donors. But it also lets them know you received their donation instead of being lost in cyberspace.

While there are no penalties to your nonprofit organization for failing to send a donation acknowledgment, it does your donors a disservice. Without that written acknowledgement, they can’t claim their earned tax deductions. Some donors might not care about this perk, but you’re likely to lose future donors if you don’t provide the acknowledgment they need (and deserve).

Why Your Nonprofit Should Send Acknowledgment Letters

Think of acknowledgment letters as a valuable part of your communications strategy. Your thank-you letters have the potential to be more impactful than any nonprofit marketing campaign—provided you give them the time, love, and care these letters deserve.

Here are a handful of reasons you should prioritize written acknowledgement letters:

• Legal: Fulfill your legal obligation to send acknowledgment letters to individuals who made at least $250 in charitable donations during a calendar year.
• Confirmation: Give your donors peace of mind by letting them know you’ve received their donation.
• Gratitude: Show appreciation to your donors and let them know how much it means to your nonprofit and its constituents.
• Impact: Let your donors know how you use their contribution and what impact it makes on individuals and communities. 
• Reminder: Remind your donors at the end of the year that they made a donation, prompting them to think about your nonprofit and potentially plan to contribute again.
• Awareness: Encourage your donors to share the cause they supported with their friends and family.

Things Your Acknowledgement Letters Should Include

According to the IRS (1), an acknowledgment letter must contain the following:¹

• Name of your organization
• Amount of contribution
• Description (not necessarily the value) of non-cash contribution
• Statement confirming no exchange of goods/services (if applicable)
• Description and good-faith value estimate of goods/services provided (if applicable)

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¹ “Charitable Contributions – Written Acknowledgments,” IRS, last modified January 5, 2023, https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-contributions-written-acknowledgments.

Also, while the IRS doesn’t require it, it’s helpful to personalize your message with the donor’s name and the date you received the charitable contribution. This information confirms the recipient’s identity and can help with their record-keeping.

Now, that’s all the information you’re legally required to include. However, learning how to create a donation receipt that prioritizes personalization calls for a few more details. For example, you might let your donors know how you used the funds (or plan to use them) and about upcoming fundraisers or volunteering opportunities. In other words, make your acknowledgment letters more than a donation receipt.

We also recommend adding a bit of personalization to your letters by segmenting. Your recurring givers and big-time donors should receive a special thank you note for their special donations. Let them know you value them for going above and beyond by adding a unique touch to your donor acknowledgement letter:

• Personal note: Send your donor a personalized message to recognize they’ve donated for a certain number of years or made a considerable one-time donation.
• Message from a leader: Have one of the leaders of your nonprofit write a personalized message letting the donor know how much their contributions mean to your charitable organization.
• Recognition: Consider announcing your recurring givers or large donors (with their permission, of course—and maybe without the exact figures) via your nonprofit email newsletter or on social media.

Examples of Donation Acknowledgement Letters

Here are a few examples of donation acknowledgment letters. These range from the bare minimum requirement to something a bit more personal. Find what works best for you.

You can copy/paste these to fulfill your legal obligation, but we suggest personalizing them to match your brand’s voice.

Example 1: Individual Acknowledgment Letter

Hi [donor name],

Thank you for your contribution of $500 to [nonprofit’s name] that we received on [date received]. We provided no goods or services in exchange for your contribution.

Example 2: Individual Acknowledgment Letter

Hi [donor name],

We’re super grateful for your contribution of $250 to [nonprofit’s name] on [date received]. As a thank you, we sent you a T-shirt with an estimated fair market value of $25 in exchange for your contribution. We hope to see you (in your new shirt) at the upcoming volunteer event on [date of event]. Thanks again for your generous donation—we wouldn’t be able to help the community without donors like you.

Thanks,

[name]

Example 3: Year-End Acknowledgment Letter

Dear [donor name],

Thank you for supporting our organization last year. Because of donors like you, we were able to help [500 animals find new homes with loving families]. Every donation counts, and we’re grateful for your contributions.

You made a total contribution of $1,000 to [nonprofit’s name] last year, and we provided you with no goods or services in exchange. We sincerely thank you for your help and hope we can count on you next year to help us help even more local animals in need.

Sign up for our email newsletter to keep up to date on all our upcoming fundraisers and volunteer events. Please share it with your friends and family to get them involved, too.

Thanks for all that you do!

With gratitude,

[name]

Go Beyond Acknowledgment

You might send an acknowledgment letter when you receive a donation, but don’t let that be the end of your communications. A critical element to retaining nonprofit volunteers is to follow up later and let your donors know how you spent their contributions. And if they opted-in to your emails, let them know about other fundraising or volunteer opportunities.

You can also let your donors know about other ways they can help your nonprofit, like signing up for a community service project or sharing a link on their LinkedIn account.

Ultimately, you want to turn one-off donations into lifelong relationships—and your acknowledgment letter is an important part of that process. So avoid the temptation to do the bare minimum by just  providing a receipt. Go above and beyond for your donors—hopefully, they’ll do the same for your nonprofit.

Think about unique ways you can show donors you care. For example, you could do any of the following:

• Make a phone call: Make a phone call to thank donors for their contributions personally.
• Write a handwritten letter: Show your donors how much their donation means with a handwritten thank you note.
• Share a picture: Let your donors see who or what they’ve helped with their donation.

Automate Acknowledgement Letters

Put your donation acknowledgment letters on autopilot with online donor management software. Classy’s platform can help you automate your thank yous, track campaign performance, manage supporters, edit recurring donations, and more.

Do you know who gives the largest donations? What about who gives the most often? Classy Manager can help you search, filter, and segment your supporters to create more targeted messaging.

Want to see the platform in action? Request a demo to learn how your nonprofit can use Classy to manage fundraisers, attract new donors, unlock intuitive payment options, send acknowledgment letters, and more.

Sources:

1.  “Charitable Contributions – Written Acknowledgments,” IRS, last modified January 5, 2023, https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-contributions-written-acknowledgments.