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Donation Acknowledgment Letter Tips for Nonprofits

7 min read
February 20, 2023
Neon One Staff

First things first: Aren’t donation acknowledgment letters just the same thing as traditional thank-you letters? No, they’re not. In fact, they have a lot more in common with donation receipts than they do with donor thank-you notes. 

Donation acknowledgment letters serve to document the details of a contribution, which can make them an important part of your donors’ tax records. A donation acknowledgment letter sent at the right time—and with the right messaging attached—can encourage further donations while also helping your supporters get their year-end financials in order.

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. While all three are similar, they cover different things.

Thank YouReceiptAcknowledgment
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 like donor name, amount paid, and transaction date.An acknowledgment is a formal letter that summarizes a contribution while also thanking the individual for their support.


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

You would send a donation acknowledgement letter in the same instances where you’d send a thank-you letter—but the details and the timing differ. Donation acknowledgement letters should go out soon after a donation is processed; in fact, your nonprofit CRM might allow you to automate the sending of these messages. Thank-you letters on the other hand, should go out within 48-72 hours of a donation being made. If you send a thank-you note immediately after a donation is processed, it will feel less personal. 

Donation acknowledgment letters are also more formal than donor thank-yous. They have specific information they need to include (more about that in the next section) and are usually reserved for large donors or corporate givers who may have special tax filings or requirements they must follow. The donation acknowledgment letter will provide detailed information and double as a receipt. 

For donors who make multiple contributions throughout the year, it can be hard to keep track of all that paperwork. One great thing you can do for them is also send an end-of-year donation  acknowledgment letter that summarizes all their contributions at the end of the year. 

One thing to keep in mind is for individuals, and most small businesses, the end of the calendar year is also the end of their fiscal year. However, 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.  

Donation acknowledgment letters are an additional 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.

What to Include in an Acknowledgment Letter

Keep in mind that your donation acknowledgment letter is more formal than a simple thank-you. It should clearly lay out the financial details of the contribution while also building rapport with the giver. Let’s tackle the technical details first.  

The IRS requires an acknowledgment to substantiate a charitable contribution of $250 or more. According to the IRS, this acknowledgement 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 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 more impactful with a few simple changes. 

Here are three ways you can take your donation acknowledgment letter to the next level.

Include an Impact Statement

While you don’t have room for an extensive explanation of how the financial contributions help drive your mission, you can include a shortened version that still drives home the impact of giving. For example, a literacy foundation’s acknowledgment letter might close by pointing out how that individual donor’s specific financial contributions helped provide X number of children with after-school tutoring. This solidifies the relationship while providing clear financial details.

Donors of all types follow the same steps of a donor journey but in different ways. Your engagement with them needs to fit that specific path and should help guide them toward the action you want them to take.

Share Itemized and Cumulative Financial Figures

While this may not apply to one-time donors, your repeat donors will really appreciate the extra effort you go to to break down their giving on a one-time, monthly, quarterly, and annual basis. Of course, you should adjust this based on their individual giving schedule so you don’t overwhelm them. These numbers can also feed into your overall impact statement, so your donor can see how both one-time and cumulative gifts have helped your cause.

Keep the Conversation Personal

While your donation acknowledgment letter is more formal, there are still opportunities to personalize it. You can do this with constituent relationship management (CRM) software. A CRM may allow you to set parameters for your acknowledgment letters that will adjust your template based on donor history.

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 centered around supporting literacy, specifically for English as a second language (ESL) students. 

With the right parameters set up, the CRM system could then deliver a version of the donation acknowledgment letter to Ms. Palermo that specifically reflects her interest in ESL. Instead of the general statement about tutoring, the template could include a more specific statement related to ESL: “Your contributions have helped X number of new English speakers become fluent 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 have an impact in it.

Using 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. It’s an opportunity to show donors exactly how their contributions have helped to drive your mission. Neon CRM allows you to provide the specific financial information they need while building on your personal relationship.

Neon CRM offers tools you can use to create and send donor acknowledgment letters that truly make an impact on your supporters. To see how it works, connect with us for a demo.

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