Donor Letters That Count: What Nonprofits Must Send and What Donors Should Expect

Clear donor letters are more than a courtesy – they’re essential documentation for charitable deductions and a key part of good stewardship. At DBMCPA, we work with both nonprofit organizations and individual donors, so we see this issue from both sides.

When a Donor Letter Is Required

Under IRS rules, a donor cannot claim a federal income tax deduction for any single charitable contribution of $250 or more unless they have a “contemporaneous written acknowledgment” from the charity. That means:

• The letter is required per contribution of $250 or more (not just total annual giving).
• The donor must have it by the time they file their return (or the extended due date), or the deduction can be disallowed.

Separately, if a donor makes a quid pro quo payment of more than $75 (a payment where they receive something of value in return – like a dinner or event ticket), the charity must provide a written disclosure stating how much of the payment is deductible and the value of benefits received.

Noncash gifts (property, stock, etc.) follow the same basic threshold – written acknowledgment is required for any single noncash contribution of $250 or more, and additional forms/documentation may be needed at higher values.

For Our Nonprofit Clients: What You Should Provide

Even when not strictly required, sending timely, compliant donor letters is a best practice. For each gift of $250 or more, your acknowledgment should:

• Clearly identify your organization
  • Your full legal name.
  • Statement that you are a tax‑exempt charity (for example, “DBM Foundation is a 501(c)(3) tax-exempt organization”).
• Identify the donor and contribution
  • Donor’s name.
  • Date of contribution.
  • For cash: the amount given.
  • For noncash: a description of the property (not the dollar value).
• Address goods or services
  • If donor received nothing in return: include a statement such as, “No goods or services were provided in exchange for this contribution.”
  • If something was provided (quid pro quo):
    • Describe the goods/services and give a good-faith estimate of the value.
    • Clarify that only the excess of the contribution over the value of what was received is deductible.
• Be contemporaneous
  • Aim to send by January 31 of the year following the contribution so donors have the letters in hand at tax time.

Additional nonprofit best practices:

• Apply the same standards to online donations, stock gifts, and in-kind donations.
• Keep copies of all letters and acknowledgments in your records.

For Our Donor Clients: What You Should Expect and Keep

If you are claiming charitable deductions on your return, you are responsible for having proper documentation. You should:

• Expect a written acknowledgment for each single contribution of $250 or more
  The letter should include:
  • Your name and the charity’s name.
  • Date and amount (or description) of the contribution.
  • Statement regarding whether you received goods or services in return (and their value, if applicable).
• Keep records for smaller gifts, too
  • For gifts under $250, keep a bank record (canceled check, bank/credit card statement) or a simple written receipt from the charity.
  • If you attend fundraising events, keep the ticket or letter showing ticket price and value of benefits (meal, entertainment, etc.).
• Pay attention to noncash gifts
  • For noncash donations of $250 or more, make sure you have a letter describing what you gave.
  • At higher levels (e.g., over $500, over $5,000), additional IRS forms and, in some cases, appraisals are needed – this is a good time to involve DBMCPA.
• Check timing
  • Make sure you have all required letters before you file your return. If something is missing, request it in writing from the charity.

When DBMCPA Can Help

Because we serve both nonprofits and donors, DBMCPA is well‑positioned to guide you through the rules and avoid unpleasant surprises in an audit.

For nonprofits, we can:

• Review your standard donor acknowledgment templates for IRS compliance.
• Help you design year-end receipt processes that are efficient and donor-friendly.
• Advise on more complex gifts (stock, real estate, restricted gifts, or gifts with benefits).

For donors, we can:

• Review your charitable contribution documentation as part of your tax preparation.
• Flag missing or incomplete letters before filing and help you request corrected acknowledgments.
• Advise on documentation and appraisals for substantial noncash contributions.

If you’re unsure whether a particular gift requires a donor letter – or whether your current letters meet IRS standards – reach out to DBMCPA. A brief review now can protect valuable deductions and strengthen the relationship between nonprofits and the donors who support them.