By On Call Attorney Todd Kulkin

Some of the allure of donating to a 501c3 non-profit organization is that a donor may be able to deduct the value of their donation from their taxes. In order for a donor to take advantage of this benefit, however, your organization must provide a 501c3 “treasury regulation compliant receipt.” You could theoretically provide a receipt for each and every donation; but the best practice is to provide a single receipt, once per year.

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Why? So that your donor has proof of all the donations s/he made during the previous tax year to your organization, organized and ready for accounting. Generally this is done at the beginning of the year, when donors are getting ready to file their tax returns.

The treasury regulations are quite particular about what may and may not go into a proper receipt. Although each situation is different (and you should speak with an attorney if you want advice on the subject), there are some elements that every receipt should share:

  1. The legal name of your organization;
  2. The organization’s Federal Tax Identification Number (EIN);
  3. The amount donated to your organization;
  4. The donation date(s);
  5. Date on which the organization received tax exempt status;
  6. Indication of whether the donor received anything of market value in return for their donation; and
  7. The market value of any gifts, products, etc. that the donor received.

There are also things that the receipt must not have, such as a guarantee that the donor will get a tax deduction.

It is worth noting that, pragmatically, not all donations will receive a receipt. For example, donors should not expect a receipt if they place a dollar in a donation box on the street, or in a community center, or place of worship, since there will be no physical record of the donation itself.

Providing this receipt is required of any non-profit organization, and is a good practice in general. This practice, however, can also provide your non-profit with an opportunity to keep in touch with its donor base, keep them informed about your organization’s activities, and solicit donors for further support. Many organizations provide a donation form with their receipt, which can be returned in a self-stamped envelope (note that 501c3s are exempt from USPS postage as well). What’s great about this practice is that your donor is already thinking about his or her tax liability when they receive the receipt, and your organization is making it as easy as possible to help do some good, and maybe benefit on their tax return the following year.

Christopher C CarrTodd Kulkin is a business attorney specializing in legal services to small to medium sized businesses, start-ups and nonprofit organizations. He has a unique commitment to flat fees, personalized law services and education on the legal issues surrounding your business.

Get started Start Your Non-Profit Answer some questions. We’ll take care of the rest.

Get started Start Your Non-Profit Answer some questions. We’ll take care of the rest.