Plain-English guide

What the IRS requires in a donation acknowledgment letter

A short checklist of the rules from IRS Publication 1771 (Charitable Contributions — Substantiation and Disclosure Requirements), written for the volunteer treasurer who has to send the letters, not the lawyer who reads them.

The two rules that matter

1. The $250 rule (substantiation)

A donor cannot claim a deduction for any single contribution of $250 or more unless they have a contemporaneous written acknowledgment from the charity. "Contemporaneous" means the donor has it by the time they file their return (or the return due date, whichever is earlier). The IRS puts the burden on the donor, but in practice donors expect the charity to send it — so most organizations send everyone a letter in January.

2. The $75 rule (quid pro quo disclosure)

If a donor pays more than $75 and receives goods or services in return — a gala dinner, auction item, event tickets — the charity must give a written disclosure that (a) says only the amount above the value of what they received is deductible, and (b) gives a good-faith estimate of that value. This one is the charity's obligation and carries a penalty per statement omitted.

What every acknowledgment must contain

• The name of the organization.
• The amount of any cash contribution.
• A description (but not the value) of any non-cash contribution.
• One of these statements:
  • "No goods or services were provided in exchange for this contribution," or
  • a description and good-faith estimate of the value of goods or services the donor received, or
  • a statement that the goods or services consisted entirely of intangible religious benefits (churches).

Not strictly required but strongly recommended: the date of each contribution, your EIN, and a sentence confirming your 501(c)(3) status.

Year-end summary or one letter per gift?

Either works. A single year-end letter that lists each gift with its date and amount satisfies the rule for all of them, as long as the goods-or-services statement covers each one. That is why our year-end format lists gifts in a small table and then adds a separate disclosure line only for the gifts that involved a benefit.

Common mistakes we prevent

• Putting a dollar value on an in-kind gift. The charity describes the property; the donor values it. Our letters never print a value for non-cash gifts.
• Forgetting the "no goods or services" sentence. Without it the acknowledgment is incomplete. It's always included.
• Netting out the benefit silently. For quid-pro-quo gifts the letter must show the estimate, not just the deductible number. We print both.
• Only sending letters to $250+ donors. Legal, but donors who gave $240 in two gifts will call you in April. Send everyone one.

Situations that need a professional

Vehicles (Form 1098-C), non-cash gifts over $5,000 (appraisals, Form 8283 Section B), stock and crypto, donor-advised fund grants (the DAF gets the acknowledgment, not the individual), and payroll-deduction gifts. Our tool flags property gifts over $500 so you remember to mention Form 8283.

Is January 31 the deadline for donation letters?

Not officially. The IRS does not set a calendar deadline for acknowledgments; it requires them to be contemporaneous — the donor must have the letter by the date they file their return, or the return's due date (including extensions), whichever comes first. January 31 is a convention borrowed from W-2 and 1099 deadlines, and it is a good one: early filers start in late January, and a donor who cannot find a letter by then will phone you. Practical rule: get year-end statements out in the last two weeks of January, and send single-gift letters within a week or two of the gift. See the year-end statement template and checklist.

Church and religious-organization giving statements

Churches follow the same Publication 1771 rules as every other 501(c)(3), with one convenience: when the only thing a donor receives is an intangible religious benefit (worship services, sacraments, religious education), the letter may say so instead of listing goods and services — and no value has to be estimated. Two details trip up treasurers every year:

• Separate gifts are not added together for the $250 rule. Fifty-two $50 offerings never individually cross $250, so strictly no acknowledgment is required — but the donor still needs a record to deduct them, so an annual statement listing every gift is the norm.
• Tuition, fees and event tickets are not gifts. If a member pays for a retreat or a school fee, that is a payment for services and should not appear on the giving statement as a deductible contribution.

In-kind gifts: the $500 and $5,000 thresholds (Form 8283)

Your letter describes non-cash property ("one used upright piano", "120 canned goods") and never assigns it a dollar value — the donor decides the value on their own return. What changes with size is the donor's paperwork, and a helpful letter reminds them:

• Over $500 in total non-cash gifts for the year: the donor files Form 8283, Section A with their return.
• Over $5,000 for a single item or group of similar items: the donor needs a qualified appraisal and Form 8283, Section B, which your organization must sign (the Donee Acknowledgment part). Signing confirms receipt of the property, not agreement with the value.
• Donated services and use of property (a volunteer's time, a free venue) are not deductible. Thank the donor warmly, but do not describe the gift as a tax-deductible contribution.

More on non-cash gifts, with a copy-paste template: in-kind donation acknowledgment letter.

Can the acknowledgment be sent by email?

Yes. Publication 1771 allows the written acknowledgment to be delivered on paper or electronically, including as an email or an emailed PDF, as long as the donor actually receives it. What matters is the content, not the medium. Keep a copy of what you sent and when.

Practical tip: if your gift list has an email column, the generator can download a mail-merge spreadsheet (one row per donor with the finished letter as the email body). Open it in Gmail (with a mail-merge add-on) or Word/Outlook mail merge and every donor gets a personal, compliant email in one pass. Donors without an email address still get a PDF letter you can print and mail.

Quick answers to the questions treasurers ask most

Gifts came in through PayPal, Venmo, Zelle or a Facebook fundraiser — who sends the receipt?

Follow the money. If the donor paid your organization's own account (your PayPal business account, Venmo, Zelle, Square, a check), you are the charity of record and you send the acknowledgment; the processor's payment confirmation is not a tax receipt. If the money reached you as a grant from PayPal Giving Fund (Facebook and Instagram fundraisers, eBay for Charity, GoFundMe charity pages), PayPal Giving Fund was the charity the donor gave to and it issues the donor's tax receipt. Send those donors a warm thank-you, but do not describe the gift as a deductible contribution to you.

Do recurring monthly donors need twelve letters?

No. Each monthly gift is a separate contribution, and none of them usually reaches $250 on its own, but the donor still needs a record to deduct the total. One year-end statement that lists every gift with its date and amount is the standard answer. The generator's year-end mode groups rows by donor name automatically.

What about employer matching gifts?

Acknowledge only what the donor personally gave. The employer's match is the company's contribution — send the company its own acknowledgment (usually its matching-gift platform asks you to confirm receipt). Do not add the match to the individual's letter.

A donor lost the letter or the amount was wrong. Can we reissue it?

Yes. Send a corrected or duplicate acknowledgment with the same required elements; there is no limit on reissuing. The only timing rule is that the donor must have a correct letter before they file the return that claims the deduction, so respond quickly in March and April.

Does the letter have to be signed?

Publication 1771 does not require a signature, letterhead or a specific format — an email counts. A signature from the treasurer, executive director or board chair is customary because donors expect it, and it costs nothing. Anyone the board authorizes may sign.

How long should we keep copies?

The IRS does not set a retention period for acknowledgments, but donors can be audited for three years after filing (six in some cases), and they will call you. Keep the letters, or the spreadsheet plus the template you used, with your other financial records — most nonprofit document-retention policies say seven years. A dated PDF of each year's batch in a shared drive is enough.

Do we send letters to businesses and foundations?

Yes, the same letter works. A business or private foundation deducts or reports the gift just like an individual and needs the same elements. Foundations often ask for it in writing before they release the next grant. Sponsorships are different: if the company received advertising or other benefits, treat it as a quid-pro-quo payment and disclose the value of what they got.

Are raffle tickets, auction purchases and gala tickets deductible?

Raffle tickets: never. The chance to win is worth what the donor paid, so there is no gift — send a thank-you, not an acknowledgment that calls it a contribution. Auction items: only the amount paid above the item's fair market value is deductible, and only if the buyer knew the value going in — print the estimated value on the bid sheet and repeat it in the letter. Event tickets: a quid-pro-quo payment; disclose the value of the dinner or entertainment and the deductible remainder, even if the donor did not attend. In the generator, put the benefit value in the Goods/services value column and the letter prints both numbers.

A donor asked to stay anonymous, or cash arrived with no name. What do we send?

An acknowledgment can only go to someone you can identify. For an anonymous donor who still wants the deduction, address the letter to whoever actually handed you the money (they can keep it private) and record only the amount and date in your books. For loose cash with no name at all — a collection plate, a donation jar — nothing can be acknowledged; the donor's own bank record or a receipt from you is the only substantiation, and gifts of any amount without a record are not deductible. Do not invent a name to fill the spreadsheet.

Someone gave us stock, or a grant came from a donor-advised fund

Stock: it is a non-cash gift, so the letter describes it ("100 shares of XYZ Corp, received March 3") and prints no dollar value; the donor values it at the mean of the high and low price on the transfer date. Donor-advised fund (Fidelity Charitable, Schwab Charitable, a community foundation): the fund is the legal donor and has already given its account holder the tax receipt. Thank the individual warmly, but the letter must not say their gift is tax-deductible or list an amount they can deduct — many treasurers add one line: "This grant was recommended by [name] through [fund]; no goods or services were provided." Put the advisor in the Donor column and the fund in a Notes column and the generator writes that paragraph for you; see the donor-advised fund page for the advisor letter, the sponsor receipt and the no-benefit rules.

A donor pledged $1,000 in December but paid in January. Which year?

The year the money actually arrived. A pledge is a promise, not a gift, and a check is deductible in the year it is mailed or delivered — a check dated December 30 and postmarked December 31 counts for that year even if you deposit it in January; a credit-card gift counts on the date the charge is made. Use the gift date, not the deposit date, in your spreadsheet's Date column so year-end statements sort donors into the right year.

Can volunteers deduct their mileage or supplies, and do we acknowledge that?

Volunteers can deduct unreimbursed out-of-pocket costs (14 cents a mile, supplies they bought for you), but their time is never deductible. Expenses of $250 or more need a written acknowledgment from you that describes the services performed and says whether they received anything in return — it does not state a dollar amount, because the volunteer substantiates the costs with their own receipts. Write those letters by hand; they are the one case where our template's amount line should be left off.

This page summarizes IRS Publication 1771 in plain language. It is not legal or tax advice. Check the current publication at irs.gov for the authoritative text.