Donation Acknowledgment Letter Tips for Nonprofits

First things first: A donation acknowledgment letter is not the same as a thank-you letter. It’s technically much more like a receipt. Now, that doesn’t mean you shouldn’t update those donation acknowledgments to include thank-you language. You should!

But, unlike actual thank-you letters, donation acknowledgment letters must document the details of someone’s contribution. A good acknowledgment letter sent at the right time—and with the right messaging attached—can encourage further donations while also fulfilling some legal requirements and getting your supporters the details they’ll need for their records.

Thank-You Letters, Acknowledgments & Receipts

The first thing to know about donor acknowledgment letters is that they’re not synonymous with thank-you letters or receipts. All three have some similarities, but they cover different things.

As you read this article, keep in mind that a good donation acknowledgment letter essentially combines a transaction receipt with a thank-you letter.

Thank You	Receipt	Acknowledgment
A donor thank-you letter is usually an informal message (i.e., not a financial statement) thanking a donor for their contribution.	A donation receipt summarizes the financial details of a contribution, such as the donor’s name, amount paid, and transaction date.	An acknowledgment is a formal letter that summarizes a contribution while also thanking the individual for their support. It usually includes both thank-you and receipt elements.

Why Send a Donation Acknowledgment Letter?

The IRS requires written acknowledgment of donations exceeding more than $250. A donation acknowledgment letter documents these transactions for your donors.

We’d contend that every donor should get an acknowledgment letter, even if their gift is under that threshold! 

You should send a donation acknowledgment letter under the same instances where you’d send a thank-you letter—and every donor should get a thank-you letter. 

A donation acknowledgment letter should go out soon after a donation is processed. That doesn’t mean you’ll have to send one manually—your online fundraising platform or nonprofit CRM should allow you to automate these messages. 

Donors will look for these communications to confirm that you received their gift. A good acknowledgment will signal to them that their donation went through, and it’ll make them feel good about their gift.

What About Annual Donation Acknowledgement Letters?

You may have donors who make multiple contributions throughout the year. When tax time rolls around, donors who intend to itemize their deductions will need to tally up their total giving. That can be tough!

One great thing you can do for them is send an end-of-year donation acknowledgment letter summarizing all their contributions at the end of the year. 

For most individuals (and most small businesses), the end of the calendar year is also the end of their fiscal year. If you have large corporate givers, you may want to track the end of their fiscal year separately to ensure you’re sending this information at the right time. Much of this will depend on state laws, tax filing requirements, and organization bylaws.  

What to Include in an Acknowledgment Letter

Donation acknowledgment letters are an opportunity to nurture your relationship with donors. While sending them at the right time is critical, the most important thing is what you choose to include.

Keep in mind that your donation acknowledgment letter should play two roles: It should both summarize a donor’s transaction and deepen their connection to your cause. 

Here are three steps you can take to reach those goals.  

1. Summarize Transaction Details

The IRS requires an acknowledgment to substantiate a charitable contribution of $250 or more. According to the IRS, this acknowledgment must include:

• name of the organization;
• amount of cash contribution;
• description (but not value) of non-cash contribution;
• statement that no goods or services were provided by the organization, if that is the case;
• description and good faith estimate of the value of goods or services, if any, that the organization provided in return for the contribution; and
• statement that goods or services, if any, that the organization provided in return for the contribution consisted entirely of intangible religious benefits, if that was the case.

These are the items that must be included in your donation acknowledgment letter. However, this is still an opportunity for you to build rapport with your donor. You can make this form more convenient and impactful with a few simple changes. 

2. Show Your Gratitude

A good donation acknowledgement letter will show donors how much you appreciate their support and help them understand the impact their generosity will have. 

A literacy foundation’s acknowledgment letter, for example, may open with a brief but heartfelt thank-you message and tell the donor that their gift will help provide two books to local schools. In a single message, the donor receives a summary of their donation and a message that deepens their emotional tie to the organization.

You don’t need to write a long thank-you message here—you’ll send them a full-blown thank-you letter a few days after their gift (right? right??). A short, sweet, heartfelt message will do the trick, especially if you follow our next suggestion.

3. Keep the Conversation Personal

While your donation acknowledgment letter is, in some ways, a formal transactional document, you still have plenty of opportunities to make it feel personal.

You can do this with good constituent relationship management (CRM) software or your online fundraising platform. The tools in those systems should let you add things like personalization tokens, specific details about their gift, and other elements that make the acknowledgment feel like a one-to-one message instead of an automated system email.

But what does that actually look like? Let’s return to the literary foundation example. 

Our donor, Ms. Palermo, is on the board of a private elementary school. All of her donations so far have been directed to the organization’s English as a Second Language (ESL) program. 

Because they’re using a system that makes it possible to create personalized communications, they can then deliver a version of the donation acknowledgment letter to Ms. Palermo that specifically references her support of the ESL program. Instead of the organization’s default statement about tutoring, the message includes a paragraph that says, “Your contributions have helped provide one-on-one tutoring services to four new English speakers this year!” 

This statement is more impactful to Ms. Palermo because it connects with something that is truly important to her. This strategy is important when acknowledging present and encouraging future donations because the number one reason people give is that they believe in the cause and want to impact it.

Use Neon CRM for Personalized Donor Letters

Your donor acknowledgment letter may be a legal requirement in some cases. But, in every case, your letter helps your nonprofit build rapport with your supporters! 

This is an opportunity to show donors exactly how their contributions have helped drive your mission. Do your tools make that easy? 

Neon CRM allows you to provide the specific financial information donors need while building on your personal relationship. You can use it to create and send donor acknowledgment letters that truly impact your supporters.

To see how it works, check out one of our group demos! They’re a great way to get a feel for the platform without the pressure of a one-on-one call.