Your nonprofit’s donors are the backbone of your organization. Without their support, you wouldn’t be able to achieve your mission, advocate on behalf of your cause, or bring awareness to the issues you represent.
When you show donors that their contributions have a real impact, they’ll be sure to remain active members of your community.
This is why effectively acknowledging your supporters is so important to your stewardship efforts, and there’s no better way to do this than by sending a donor acknowledgement letter!
While nearly all nonprofits send donor acknowledgement letters to their donors, it’s not always clear what these letters should contain, how they should look, or when they should be sent.
In this article, we’ll answer all of your biggest donor acknowledgement letter questions so you can be confident that your organization is sending the best possible gift acknowledgements to your valued supporters (and providing the necessary information required by the IRS).
The top donor acknowledgement letter questions include:
- What is a donor acknowledgement letter?
- What are the requirements for a gift acknowledgement?
- How should I format a donor acknowledgement letter?
- What else should I know before writing a gift acknowledgement?
- What does a donor acknowledgement letter look like?
As we walk you through these key questions, we’ll also offer tips to enhance your donor acknowledgement strategy and even show you how to implement smart fundraising software tools to make your letters really stand out.
Ready to learn more about acknowledging your supporters’ gifts? Let’s dive in!
1. What is a donor acknowledgement letter?
If you’re new to fundraising or don’t have much experience managing donor communications, it might be worth reviewing what exactly a donor acknowledgement letter is.
In general, there are two core types of gift acknowledgements that nonprofits extend to their donors:
- Thank-you messages. These are basic messages thanking individuals for making a gift and mainly hold value as a stewardship tool. When your donors feel that their contributions are appreciated, they’re more likely to remain involved with your organization.
- Gift acknowledgements. Either sent as formal letters or emails, these include IRS-mandated content outlining information about a gift in excess of $250.00 made by individual donors. They may use these to write off their contribution on their tax return.
Both of these kinds of acknowledgements are valuable tools your nonprofit can use to boost donor retention and mitigate donor attrition.
However, because formal donor acknowledgement letters are necessary for supporters to correctly file their tax return, these communications should be carefully crafted!
Don’t worry, though. With effective fundraising software tools like automated donation acknowledgements, your team can build gift acknowledgement templates that automatically populate the correct donor information without manual input.
You can schedule formal donor acknowledgement letters to be sent out annually before that year’s tax filing deadline. In general, most nonprofits send their acknowledgement letters around January 31st.
For informal thank-you messages, the standard rule of thumb is to automate these messages to be sent out following each and every gift. The sooner you thank donors for their gift, the better!
Take a look at how your nonprofit can automate the donor acknowledgement process using Salsa’s innovative suite of fundraising software solutions.
2. What are the requirements for a gift acknowledgement?
Since donor acknowledgement letters contain information required by the IRS as proof of giving for donors who want to write off their contribution on their tax return, the federal agency sets core standards for these messages that must be met by nonprofits.
A formal donor acknowledgement letter should include the following information:
- A statement declaring the nonprofit’s tax-exempt status as a 501c3. This should include the nonprofit’s EIN (Employer Identification Number) so the donor may verify the organization’s status as a recognized nonprofit organization or advocacy group.
- The name of the donor that they used to make their gift. This is so they can avoid confusion when filing their taxes (and so that the IRS can spot fraudulent filings). You should also include the full, legal name of your nonprofit organization.
- The date the the gift was received by your nonprofit. Remember, you’ll need to send a letter for each individual gift a donor makes to your nonprofit. You can’t simply send a mass acknowledgement letter with the dates of all gifts made during that year.
- A description of the donation. For cash gifts (including cash, checks, credit/debit card payments, and payroll deductions), this corresponds to the monetary value of the donation you receive. For non-cash gifts, simply describe the gift without assigning it a cash value.
In addition to these details, your nonprofit will also need to acknowledge if your organization provided any goods or services to your donors in exchange for their gift. For most nonprofits, this would be something like a member t-shirt, a thank-you mug, or small gift card.
As you write your donor acknowledgement letter, be sure to abide by the following rules of thumb when referencing goods and services provided in exchange for donations:
- Always include a good faith estimate of the monetary value of any tangible goods or services provided.
- Acknowledgements are also required for insubstantial or intangible good or services given to donors.
- Be sure to acknowledge when a donor didn’t receive anything in exchange for their donation.
3. How should I format a donor acknowledgement letter?
Above all, your donor acknowledgement letters should contain the information listed in the previous section. Your letter, however, still needs to endear donors to your nonprofit and strengthen your relationship. It’s a letter, not a donation receipt!
Your team may choose to follow a format like this:
- In the letterhead, include your nonprofit’s logo prominently. Add a return address in the upper left-hand corner and the date the letter was sent in the upper right-hand corner.
- In the salutation, warmly address your donor by name. While this is a formal letter, be sure not to alienate supporters with staid or stiff language.
- In the first paragraph, immediately thank donors for their gift. Clearly state your official name and make your tax-exempt statement.
- In the second paragraph, include the details of their gift including its cash value, a description of the contribution, and the date it was made.
- In the third paragraph, acknowledge whether or not goods or services were rendered in exchange for your donor’s support.
- In the final paragraph, thank your donor again and outline how their donation was put to use in the previous year. State how important their support will be to your cause moving forward.
- In the valediction, warmly wish your donor well and include a key member of your nonprofit as the signatory, like your development director, major gift officer, or executive director.
Finally, be sure to keep this letter brief and easily scannable. You want your donors to immediately recognize that this letter is a formal donation acknowledgement and to not disregard it as junk mail or a generic engagement letter.
4. What else should I know before writing a gift acknowledgement?
In addition to meeting the requirements set by the IRS, there are a few more things your team should know before creating your automated gift acknowledgement letter template.
For example, feel free to add elements that make your letters unique to your nonprofit. Donors should feel like they are communicating directly with your team, and not like they’re receiving a generic message that could apply to just anyone.
Additionally, your donor acknowledgement letters don’t have to be sent by mail. In fact, many donors will prefer to receive these by email. Just be sure to include a PDF attachment of the official letter with the email so they can easily include it in their tax return.
Another tip to note is that the effectiveness of your donor acknowledgement letters as retention and stewardship tools is undercut if these are the primary communications donors receive from your team. Be sure to frequently engage your supporters year round!
Finally, one key strategy your team might find useful is to send out customized acknowledgement letters to different segments of your donor community, including first-time donors, returning givers, individuals who received gift matches, and recurring donors.
This way, they’ll feel like their unique contribution had an impact at your nonprofit, and not that they’re interchangeable with your other supporters.
5. What does a donor acknowledgement letter look like?
Looking for an example of what a great donor acknowledgment letter looks like in action? Check out our donor acknowledgement letter template to get an idea of how your new and improved letters will look:
Dear [Donor Name],
Again, thank you so much for your support over the last year. Donors like you are vital to [Organization Name] and the achievement of our mission. As a tax-exempt organization outlined in Section 501c3 of the Internal Revenue Code (EIN [XXXX]), every donation counts and we couldn’t have made the same impact without your gift.
On [date of donation], you made a gift of [$X.XX] to our cause. Your generous donation consisted of [description of the gift] and was processed as a [cash, credit, debit, check, etc.] transaction.
In exchange for your contribution, you received [X good(s) or service(s)] as a gift of thanks. [Alternatively: In response to your contribution, no goods or services were rendered.]
From our family at [Organization Name], we want to extend our deep appreciation for your donation. Aided by your support, we were able to reach our goal of [X goal] and achieve [X accomplishment]. In the next year, we’ll need you on our team to carry out our mission of [X].
With warm wishes and gratitude,
[Signature of Signatory]
[Printed Name of Signatory]
[Signatory’s Official Title]
If your nonprofit wants to retain donors for years to come, you’ll need to perfect your donor acknowledgement letter strategy. Now that you’ve reviewed these expert tips, you can get started revitalizing your organization’s acknowledgement letters!
Want to improve how your nonprofit makes meaningful connections with its donors? Check out some of these key additional resources to get started:
- Salsa’s Fundraising Software. Revolutionize your relationships with donors by leveraging Salsa’s comprehensive suite of fundraising solutions to boost giving and retention.
- 6 Tips for Engaging Mid-Level Supporters. Donor acknowledgement letters make a big impression on coveted mid-level donors. Take a look at our 6 smart tips!
- Qgiv's 4 Awesome Fundraising Letter Templates. Looking to learn more about writing letters to donors? Check out Qgiv’s fundraising letter templates for inspiration.