Donation Acknowledgment Letters: What the IRS Requires for Gifts of $250 or More

If someone gives your church or nonprofit $250 or more in a single gift, they can't deduct it without a written acknowledgment from you. Get the wording wrong and the donor loses the deduction. Here's exactly what the letter needs.

When you need one

The IRS requires a written acknowledgment for any single contribution of $250 or more. Separate gifts are generally treated separately, so five $100 checks don't trigger the rule. Plenty of organizations send every donor a year-end statement anyway.

Technically, getting the acknowledgment is the donor's responsibility. In practice they'll expect it from you, and a prompt, clear letter makes them likelier to give again.

What it must include

1. Your organization's name.
2. The amount of a cash gift (cash, check or card), or a description of a non-cash gift without stating its value. Valuing donated property is the donor's job.
3. A statement about goods or services: that you provided none in exchange, or a description and good-faith estimate of the value of what you did provide. Religious organizations can instead state that the only benefit was intangible religious benefits.

The deadline

The donor must receive the acknowledgment by the earlier of the date they file their tax return or the return's due date, including extensions. That's why January is year-end-statement season. A single statement listing each gift, with the required wording, works.

The $75 rule for events and tickets

When someone pays more than $75 partly as a gift and partly for something in return, such as a gala dinner, a golf outing or an auction item, you must give them a written disclosure. It must say that only the amount above the value of what they received is deductible, and give a good-faith estimate of that value.

The IRS can charge a penalty of $10 per contribution, up to $5,000 per fundraising event or mailing, for missing these disclosures.

For churches

Admission to worship services and other intangible religious benefits don't need to be valued. The acknowledgment can simply state that the only benefit provided was intangible religious benefits.

Make it easy on yourself

• Log every gift as it comes in.
• Flag any single gift of $250 or more so none slip through.
• Send thank-you letters promptly, and a year-end statement in January.
• Keep copies with your financial records.

General information based on IRS Publication 1771, not tax advice. Ask your accountant about your situation.