If your nonprofit organization receives any donation for supporting a cause, the best way to express your gratitude is by writing a thank-you letter. This letter will not only strengthen your relationship with the donors but also will help in raising future donations as well. In fact, maintaining relationships is key for securing future donations and there is no better way of keeping the relationships intact than by writing a thank-you letter. As you go through this article you will be shown a sample donation thank you letter for tax purposes.
Besides these letters acting as a medium for expressing gratitude, thank-you letters can also be used for tax purposes. If a donor has contributed a significant amount to an organization, a thank-you letter from the organization can help the donor secure a tax deduction. These letters act as official donation receipts that can be used by the donors to claim tax deductions for the donations made.
The taxing agencies require the donors to provide evidence on the contribution made to the organization. They ask for a bank record or any document that provides information about the donation made to the nonprofit organization. Let’s say the donor has contributed an amount of $250 or more. The individual needs to provide some evidence claiming the contribution.
Now, if you are a tax-exempt organization, you should help your donors by giving a written statement acknowledging their contribution. This could be in the form of a thank-you letter. A thank-you letter not only acknowledges their contribution but also appreciates the donation made to your organization.
In this article, we will give you an in-depth explanation of what a donation thank-you letter is, and when is the ideal time for nonprofit organizations to send thank-you letters to their donors. We will also tell you how to write a donation thank-you letter for tax purposes and share some sample letters with you.
Without any further ado, let’s dive in.
What Is A Donation Thank You Letter?
A donation thank-you letter is more than just saying thank you for the generous contribution made towards the organization. Tax-exempt organizations are obligated to provide a written acknowledgment to their donors acknowledging the donation made by them. These letters are conveyed in the form of thank-you letters and provide dual benefits.
Now, the question is, when is the best time for an organization to send a donation thank-you letter to the donor.
When Is The Ideal Time To Send Donation Thank You Letters?
The sooner you send the donation thank-you letters, the better. Donors anticipate that they will receive their acknowledgment letters immediately after they have made the donation. Sending these letters early will not only demonstrate to them how deeply you appreciate their contribution but also show that you value relationships. Having said that, you should certainly send the thank-you letter before the donor files for the income tax return for that year.
That said, let us now see some tips on writing an effective donation thank-you letter for tax purposes.
How To Write An Effective Donation Thank You Letter For Tax Purposes?
Below are some important points that you need to remember while writing a donation thank-you letter.
Choose The Medium To Writer The Letter
You can either write a thank-you letter through an email or write it with your hand. Writing a handwritten thank-you letter adds a personal touch to the letter while the email reaches faster to the recipient.
Start The Letter By Greeting the Donor
Begin the letter by greeting the donor. Use words like “Dear” or “Respected” followed by their names. If you start the letter by greeting the donor with something like “Dear friend”, then this shows that your organization is not serious. Avoid such use of words.
Say Thank-You For The Donation
After greeting the donor, you need to begin the body of the letter by thanking the donor for the contribution that the individual made to your organization. You can say something like this “We are sincerely grateful for the generous contribution made to our organization”. Starting the letter by appreciating the donor will set the tone for the rest of the letter.
Mention The Amount Received
Soon after thanking the donors for their contribution, mention the amount that you have received from them. It is also better to mention the date of the donation made. In addition to this, you should also mention the mode of transaction for the money that your organization has received. If a donor contributed a certain amount and in return, you have exchanged some goods, it is necessary to acknowledge this in your letter. If the donor hasn’t received anything for their contribution, then mention the amount only.
Mentioning these details in the letter acknowledges the contribution and also legitimizes the letter as a donation receipt.
Include The Organization’s Tax-Exemption Status And Details
Include a statement saying your organization is a tax-exempt organization. With that, you should also provide your registration details like the registration number of the organization. This will help the donor to use the number to check the organizations’ tax-exempt status.
Provide Details Of How The Donation Has Helped The Cause
Include details of the donation that has helped the cause. Details like how the money was used and what were the results of the donation. You can also include testimonials if you have, to let the donor know how the donation helped a person or any animal for that matter.
Reiterate Your Gratitude To The Donor Again
At the end of the letter, you should again say thank you to the donors for their donation. Doing so will let them know how deeply you appreciate their generous act of kindness.
End The Letter By Including Your Name And Other Contact Details
You should end the letter by using words like “Sincerely”, “Truly”, or “Regards”. Along with these words, you should also include your name and other contact details like your contact number. Now, if you are sending a handwritten thank-you letter, then you should also include a signature at the end. Including your signature will legitimize the authenticity of the letter.
Mail The Letter At An Appropriate Time
Many fundraisers believe that the timing of sending the thank-you letter is crucial. Sending the letter immediately, say within 48 hours after receiving the donation will have a positive impact. However, sending the thank-you letter much later will have minimal impact.
Proofread The Letter
Check the spelling and grammar before sending the letter. Letter with spelling and grammar mistakes make you look unprofessional. In addition to this, make sure to check the donor’s name if the name is correctly spelled or not.
Write Different Letters For Multiple Donations Received From A Single Donor
Don’t write a single thank-you letter for multiple donations that you have received from a single donor. If the donor has made multiple donations to your organization, then write a separate thank-you for each of the donations made to your organization.
Now, let us see some samples of writing a donation thank-you letter for tax purposes.
5 Samples On How To Write Donation Thank You Letters For Tax Purposes
Sample 1:
If you are looking to send a handwritten thank-you letter, here is a sample donation thank you letter for tax purposes written by hand.
[Sender’s Name]
[Sender’s Organization Name]
[Organization Address]
[Date]
[Donor’s Name]
[Donor’s Address]
Dear Mr. [Name of the donor],
On behalf of our organization, I am sincerely grateful for the generous donation that you have made in support of our cause to educate the girl child. We have received an amount of $250 on January, 20th, 20XX. We also acknowledge that no goods were given to you in return for the donation.
Ours is a tax-exemption organization and your contribution is eligible for a tax deduction. Please keep this letter for tax purposes. Again, thank you for the generous contribution made to our organization.
Sincerely,
[Your Name]
[Contact Number]
[Email ID]
[Signature]
Sample 2:
If you are looking to send an email thank-you letter, here is a sample donation thank you letter for tax purposes written, using an email.
To: [Donor’s Email ID]
CC: [Sender’s Email ID]
Subject: Thank You For The Donation
Dear Ms. [Donor’s Name],
I sincerely thank you for donating the essential items required for our school. These items have certainly upgraded our infrastructure and helped the children to access modern technology. On March, 20, 20XX, we received an amount of $10,000 and have purchased the following items:
- Tablets
- Laptops
- Headsets
I also acknowledge that I have not given you any goods like T-shirts, gifts, etc. in exchange for the donation. My organization is a tax-exempt organization that comes under section 501 [c] [3] of the Internal Revenue Code. Contributions made to our organization may be tax-deductible. This letter acts as a donation receipt for your tax purposes.
Again, thanks for donating a generous amount to help upgrade our infrastructure.
Regards,
[Your Name]
[Organization’s Name]
[Contact Number]
Sample 3:
Here is another sample donation thank you letter for tax purposes using a handwritten letter.
[Sender’s Name]
[Sender’s Organization Name]
[Organization Address]
[Date]
[Donor’s Name]
[Donor’s Address]
Respected Mrs. [Name of the donor],
Thank you for all the support that you have given to our organization. Your recent contribution has helped us buy essential farming materials like pesticides and advanced equipment that will help the farmers greatly. On February, 15, 20XX, we received an amount of $20000 from you, through a credit card transaction. In exchange for your donation, you received our company’s T-shirts as a gift of thanks.
As a tax-exempt organization that comes under section 501 [c] [3] of the Internal Revenue Code, the contribution made towards our organization is tax-deductible. Please keep this letter as an acknowledgment letter of your donation that can be used for tax purposes. Again, thanks for the donation.
Sincerely,
[Your Name]
[Contact Number]
[Email ID]
[Signature]
Sample 4:
Here is another sample donation thank you letter for tax purposes written using an email.
To: [Donor’s Email ID]
CC: [Sender’s Email ID]
Subject: Appreciation Letter For A Generous Donation
Dear Mr. [Donor’s Name],
I hope you are doing well. I am writing this letter to thank you for your continuous support of our initiative of helping children between the ages of 5 to 15 to access nutritious food. Over the last 20 years, you have been keenly taking part in our initiative and your recent contribution has helped us provide nutritious food to more than 10 children.
We received an amount of $1000 on January, 10, 20XX from you which has helped us prepare meals for more than 10 kids. Thank you for that. In return for the donation, we acknowledge that we havén’t done any favors to you. We are a tax-exempt organization and your contribution can be tax-deductible. For tax purposes, you can use this letter.
Again, I deeply appreciate your support and the donation made to our organization.
Regards,
[Your Name]
[Organization’s Name]
[Contact Number]
Sample 5 (Handwritten Letter):
[Sender’s Name]
[Sender’s Organization Name]
[Organization Address]
[Date]
[Donor’s Name]
[Donor’s Address]
Respected Ms. [Name of the donor],
Thank you for donating a generous amount to the Children’s Home Center. Your contribution has helped many orphaned children to get a roof over their heads. Your willingness to help these children shows how deeply concerned you are about this cause. The recent amount of $5000 on April, 10, 20XX has given shelter to a couple of kids and in return, you haven’t expected a favor from us. Your continuous support of our organization is appreciable.
As a tax-exempt organization that comes under section 501 [c] [3] of the Internal Revenue Code, your donation made to our organization is tax-deductible. Please find this letter as a receipt for your donation which will help you with your tax returns.
Sincerely,
[Your Name]
[Contact Number]
[Email ID]
[Signature]
Conclusion
If you are looking to appreciate a donor for their donation then sending a thank-you letter will be the best way of doing it. The letter also acts as a donation receipt and can be used by the donors for tax purposes. In this article, we have given an in-depth explanation of how to write a donation thank-you letter for tax purposes with samples. You can use them to craft your donation thank-you letters.
