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 acknowledgment letter!
While nearly all nonprofits send donor acknowledgment 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 acknowledgment letter questions so you can be confident that your organization is sending the best possible gift acknowledgments to your valued supporters (and providing the necessary information required by the IRS).
The top donor acknowledgment letter questions include:
- What is a donor acknowledgment letter?
- What are the requirements for a gift acknowledgment?
- How should I format a donor acknowledgment letter?
- What else should I know before writing a gift acknowledgment?
- What does a donor acknowledgment letter look like?
As we walk you through these key questions, we’ll also offer tips to enhance your donor acknowledgment 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 acknowledgment 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 acknowledgment letter is.
In general, there are two core types of gift acknowledgments 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 acknowledgments. 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 acknowledgments are valuable tools your nonprofit can use to boost donor retention and mitigate donor attrition.
However, because formal donor acknowledgment letters are necessary for supporters to correctly file their tax returns, these communications should be carefully crafted!
Don’t worry, though. With effective fundraising software tools like automated donation acknowledgments, your team can build gift acknowledgment templates that automatically populate the correct donor information without manual input.
You can schedule formal donor acknowledgment letters to be sent out annually before that year’s tax filing deadline. In general, most nonprofits send their acknowledgment 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 acknowledgment process using Salsa’s innovative suite of fundraising software solutions.
2. What are the requirements for a gift acknowledgment?
Since donor acknowledgment letters contain the 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 acknowledgment 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 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 acknowledgment 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 a small gift card.
As you write your donor acknowledgment 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.
- Acknowledgments are also required for insubstantial or intangible goods or services given to donors.
- Be sure to acknowledge when a donor didn’t receive anything in exchange for their donation.
Bonus tip! What’s one reason nonprofits should take a second look at their donor acknowledgment letter strategy? Sending these messages is a great way to regain lapsed donors. When they’re reminded of the impact their gifts can make, they’ll be inspired to reconnect with your cause!
3. How should I format a donor acknowledgment letter?
Above all, your donor acknowledgment 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 acknowledgment and to not disregard it as junk mail or a generic engagement letter.
4. What else should I know before writing a gift acknowledgment?
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 acknowledgment 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 acknowledgment 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 acknowledgment 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 acknowledgment 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 acknowledgment letter look like?
Looking for an example of what a great donor acknowledgment letter looks like in action? Check out our donor acknowledgment 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]
A letter like this is functional for tax-reporting purposes, but also for building a stronger relationship between your donor and your organization. Tying their gift to a concrete outcome helps them visualize the impact of their philanthropy on their community, and they’ll feel appreciated and recognized by your organization.
This letter shouldn’t be the end of your communication, however. In the days or weeks after their gift, follow up with additional ways to get involved like having their gift matched by their employer or becoming a volunteer. You can also send them an update on the impact of their gift, like images of your constituents or programs in progress thanks to their support.
If your nonprofit wants to retain donors for years to come, you’ll need to perfect your donor acknowledgment letter strategy. Now that you’ve reviewed these expert tips, you can get started revitalizing your organization’s acknowledgment letters!
If you want to unlock more strategic fundraising tips, check out these additional resources:
The Complete Guide to Nonprofit Advocacy. Nearly 40 pages of advocacy tips, tools, and worksheets to plan and implement a successful advocacy campaign.
Nonprofit Editorial Calendar Toolkit. Put your marketing strategy into overdrive with our toolkit and templates to plan, organize and implement all your nonprofit marketing content.
Free Demo: Salsa's Online Advocacy Software. Find the best solution for your nonprofit, association, campaign or 501c3 organization by leveraging our suite of advocacy tools!
Webinar: How to Create & Automate Effective Nonprofit Donor Thank You Letters & Emails. View our webinar replay video and get best practices on writing donor thank-you letters.