Nonprofit donation receipts: what the IRS requires

The $250 rule: when a written acknowledgment is required

For any single contribution of $250 or more, the donor cannot claim a tax deduction without a contemporaneous written acknowledgment from your organization. “Contemporaneous” means the donor has it in hand by the time they file their return, or by its due date if that comes first. Organizations that acknowledge promptly, gift by gift, save their donors real trouble in April.

Below $250 a bank record can suffice for the donor, but sending receipts for every gift is still the norm: donors expect it, and it is your best stewardship touchpoint.

What the acknowledgment must contain

• Your organization's name
• The amount of cash contributed, or a description (not a value) of property contributed
• One of the following three statements:
  • That no goods or services were provided in return
  • A description and good-faith estimate of the value of what was provided
  • That goods or services consisted entirely of intangible religious benefits

The no-goods-or-services statement is the piece organizations most often forget, and its absence is what disqualifies otherwise valid receipts.

The quid pro quo rule: gala tickets and auction dinners

When a donor pays more than $75 and receives something in return, such as a gala dinner, event tickets, or merchandise, that is a quid pro quo contribution, and you are required to provide a written disclosure: a good-faith estimate of the value of what they received, and a statement that only the amount above that value is deductible. A $200 gala ticket with a $60 dinner means $140 is the deductible portion, and your receipt should say so. Penalties can apply to organizations that fail to make these disclosures.

Non-cash gifts

For property, your receipt describes the item but does not assign it a value. Valuation is the donor's responsibility, and larger non-cash gifts trigger their own donor-side forms. Vehicles and some other categories carry special rules; when in doubt, describe, don't value.

Year-end statements: expected, if not always required

A single year-end statement listing every gift with dates and amounts has become standard practice: it gives donors one document for their preparer and gives you a natural January stewardship touch. Include the same required language, and make sure the statement and the individual receipts agree, because donors notice when they don't.

Making it automatic

The rules are stable; the operational failure is volume: receipts that go out late, without the required language, or numbered inconsistently. That is worth automating, so that every gift produces a receipt with compliant 501(c)(3) language, a quid pro quo disclosure where one applies, sequential numbering backed by an audit trail, and a year-end statement that agrees with all of it.

This guide is general information, not tax, legal, or accounting advice. Rules change and situations differ, so confirm specifics with your CPA or advisor.