Each country, province or state will have their own guidelines for tax receipts but generally your nonprofit’s donation receipt should include:
- A statement indicating that it is an official receipt for income tax purposes
- The name and address of the charity
- Name and address of your donor
- A unique donation ID
- The gift amount and the date it's received
- Signature from your charity
- A brief description of the gift and estimated market value if it’s an in-kind donation
- If a good or service is donated in kind, clearly describe the donation
It’s important that your receipts include the correct information so that they can be claimed when doing taxes, this is very important to donor retention. If their receipt can’t go through on a technical error it's frustrating for your donor to have to contact you all over again and may even prevent them from donating in the future.
There is no specific format your donation receipt needs to follow but there are practices you can put in place to create an exceptional donation receipt.
Best Practices for Awesome Donation Receipts
1. Add a Personal Touch by Thanking and Addressing Your Donor by Name
Now obviously you need to include their full name in the receipt but there are other ways you can add a personal touch to your paperwork. Include their first name in the header or email message to make the delivery feel more personal and less like a transaction.
Receipts are a necessary piece of paperwork, but it is also an opportunity to say thank you! Having a short thank you message is an appreciative gesture that can make a difference in your communication.
2. Always Store Copies of Your Donation Receipts
Donor Engine automatically keeps a record of your receipts but if you’re not using a donor management software you should keep your records secure in a cloud based or physical storage system. It’s important to have your own system and organizational rules for filing at your nonprofit. Tracking the donation receipts you’ve issued keeps everything in order and is just good practice.
3. Have a Unique Serial Number or Donation ID
Keep your records organized by having a unique donation ID for every receipt issued to donors, Donor Engine does this for you automatically so you don’t even have to think about it.
4. Keep a Consistent Format
Have a template for your receipts to keep them consistent. A great template will not only make you appear professional to your donor but also makes for easier filing by keeping a standard guide for information. This also reduces the risk of forgetting data when filing donations.
5. Be Clear on What Gifts Are Tax Deductible
Depending on where you live there are strict rules on what gifts are used in a deductible. Check your government website to find out the rules for your country or state. When cre Many templates online will have this which can cause a problem when used with a non-deductible gift.
Good practice would be to leave the line off if you are unsure if it counts towards taxes and speak with the donor in person once you’ve had the chance to look into it. Specify the type of donation in your receipt and outline the product or service gifted to you with in-kind donations. Donor Engine uses a built in tool to help you keep track of your in-kind donations for you.
When should you send your donation receipt?
Should you issue them immediately or at the end of the year as a cumulative receipt? Issuing a receipt right away may help donors feel more engaged with your nonprofit by keeping their contribution fresh in their mind. Typically donors receive a cumulative receipt once a year with all of their donations in one place and monthly donors are also given a cumulative receipt along with an impact report.
If you choose to issue a receipt at the end of the year the biggest benefit is reducing the amount of work your admin staff has by compiling possibly multiple receipts in one document. This makes it easier to account for down the line and also helps your donor stay organized by compiling the years receipts for them.
When delivering receipts it's nice to attach a personalized note or even visit your donor in person. Making the effort to personalize your receipts is a small way to show your appreciation.
Receipts can seem a lot to manage but Donor Engine can help by seamlessly processing one time gifts and monthly gifts, as well as takes care of all the receipts for you. We also have a through receipt tracking and auditing that will ensure that no donation is left un-receipted, unless you explicitly want it to.
If you have any questions on donation receipts or want to save time on issuing receipts reach out to us at donorengine.com/contact
. We are always happy to answer any questions that you may have and offer free demos on our software.