The Truth About Nonprofits and Tax Receipts
We get a lot of questions from our nonprofit partners about issuing receipts to their donors for charitable donations for tax purposes. Today we'll share a little bit of information from the IRS to clear up any confusion! Check out this pdf for more details.
Here are the key facts that donors should know about claiming a charitable contribution on their federal income tax returns:
- Donors may use their bank statement to claim a tax deduction for a charitable contribution under $250.00.
- It is the donor's responsibility to obtain a written acknowledgment from the nonprofit for a single contribution of $250.00 or more.
As a nonprofit you are not legally required, nor will you incur a penalty, if you do not provide donors with acknowledgments. However, donors will need a formal acknowledgement to claim a tax deduction for a charitable contribution above $250.00. You're in the business of keeping your donors as happy as possible! So, like all good charitable organizations, you should provide the following information in a timely fashion when a donor requests a receipt:
1. The name of organization.
2. The monetary contribution amount.
3. A description (but not the value) of non-monetary contribution.
4. If no goods or services were provided in return for the contribution: a statement that no goods or services were provided by the organization in return for the contribution.
5. If goods or services were provided in return for the contribution: a description and good faith estimate of the value of goods or services, if any, that an organization provided in return for the contribution.
Donors and Personal Info
We've chatted with many nonprofits about their donors' reluctance to hand over personal information. Your donors will feel comforted with the knowledge that their bank statement can be used to claim a tax deduction for a donation under $250.00. Donors can feel comfortable contributing with minimal effort on your part, resulting in zero reluctance on their part.
If a donor wants to request a tax receipt for a DipJar donation, they can do so here: https://www.dipjar.com/receipts. We then connect the donor to nonprofit with details of the transaction to make the receipting process smooth and simple.
If you have more questions about nonprofit strategy, you can always reach out to the DipJar fundraising experts for help. It's what we love to do!