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Non-Profit Donor Acknowledgement Letter

  • Non-profits rely heavily on donations and contributions from individuals, corporations, and other donors to fund their operations and charitable programs.
  • An individual donor may claim a charitable tax deduction on its federal income tax return equal to the value of the donation, less the value of any goods or services received from the non-profit in exchange.
  • Federal tax law requires that:
    • The donor have a bank record or a written communication from the non-profit regarding the contribution before it can claim a charitable deduction.
    • The donor obtain a contemporaneous written acknowledgment of any single contribution of more than $250 to serve as proof of the contribution.
    • The non-profit proactively provide a donor with a specific written disclosure statement if the donor made a single contribution of more than $75 and received goods or services from the non-profit in exchange (known as a quid pro quo contribution).
    • Non-profits that fail to meet this disclosure requirement are subject to a $10 per contribution penalty, not to exceed $5,000 per fundraising event or mailing.
    • A non-profit may avoid the penalty if it can show reasonable cause for the failure.
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Description

Non-Profit Donor Acknowledgement Letter

Non-Profit Donor Acknowledgement Letter Preparation Form (Coming Soon) – We recommend that you gather the information in this form prior to accessing the online questionnaire.  Doing so will help you efficiently create your custom Non-Profit Donor Acknowledgement Letter.

Summary

Non-profits rely heavily on donations and contributions from individuals, corporations, and other donors to fund their operations and charitable programs. An individual donor may claim a charitable tax deduction on its federal income tax return equal to the value of the donation, less the value of any goods or services received from the non-profit in exchange. Federal tax law requires that:
  • The donor have a bank record or a written communication from the non-profit regarding the contribution before it can claim a charitable deduction.
  • The donor obtain a contemporaneous written acknowledgment of any single contribution of more than $250. This acknowledgement serves as proof of the contribution.
  • The non-profit proactively provide a donor with a specific written disclosure statement if the donor made a single contribution of more than $75 and received goods or services from the non-profit in exchange (known as a quid pro quo contribution). Non-profits that fail to meet this disclosure requirement are subject to a $10 per contribution penalty. This penalty is not to exceed $5,000 per fundraising event or mailing. A non-profit may avoid the penalty if it can show reasonable cause for the failure.

Details

The law generally places the burden of obtaining the acknowledgment on the donor. However, it is often in the non-profit’s best interest to proactively provide one, even if not required, providing the acknowledgment:
  • Gives the non-profit an opportunity to build donor relationships that may result in future contributions.
  • Helps the non-profit meet donor expectations that the non-profit received and appreciated the donation.
  • Makes it easier for the donor to claim a tax deduction.
While this document focuses on the non-profit’s obligations and recommended practices when acknowledging contributions from individual donors, drafters can also use this document to help prepare an acknowledgment letter for contributions from corporate donors. This document can be purchased as a stand along document or as part of our Non-Profit Compliance Package.

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Headquartered in the heart of Midtown Manhattan, Helix Compliance is a legal tech firm that helps turn dreams into reality.  Managed by US-based attorneys—current and former General Counsels, Chief Compliance Officers, and Law Firm Practitioners—Helix provides essential documentation for non-profit organizations, small business owners, and individuals to achieve their goals and protect their organizations.  By embracing leading automation technology methods, Helix seeks to efficiently improve the quality, while reducing the cost, of fully customizable business documentation.  If you would like to learn more about Helix and how we can help you, please do not hesitate to send a message to info@helixcompliance.com.

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