A donation receipt is a form of receipt that shows concrete evidence that a benefactor had donated a given value to a beneficiary. Non-profit receipts are given when a donor donates to a nonprofit organization. The charity organization that receives the donation should provide a receipt with their details included. The organization should also fill in their details and a description of the donation and not the value. If the nonprofit gives back anything, it must give the description and value.
Reasons Why Receipts are Compulsory?
For the donor’s side
Recordkeeping: This is the most basic reason why a donor will require a nonprofit receipt. The donor requires to have a financial record of his/her donations. It also helps in keeping track of their financial usage.
Communication tool: A donation receipt also works as a communication tool as it gives the donor feedback on their donation. It lets them know and confirm that their donation was received and accepted.
Tax returns: The IRS allows donors to claim a tax deduction on their federal tax return. But the donor must have a written document from the nonprofit organization before claiming for their charitable contribution on their federal tax returns.
Acknowledgment: The donor feels his/her efforts have been acknowledged by the nonprofit. This creates a better relationship in the future.
Financial record-keeping: Donation (nonprofit) receipts help in keeping account of finances or other donations received. This also helps to create an accurate end of year/term financial records.
Legal requirements: The IRS demands that for donations worth $250 or more, the nonprofit must give a nonprofit receipt to the donor. Failure to this can lead to penalties.
Donation record keeping: Donation (nonprofit) receipts help in keeping a record of their donors as well as keeping track of their donation history.
IRS Regulations for Non-profits to Issue Receipts
When a single donation is worth more than $250, the IRS demands that the donor must receive a written document from the nonprofit organization for claiming a tax deduction.
When a donor donates worth more than $75, and in return, he/she receives goods or services in exchange. The donor should receive a non-profit receipt with a written disclosure of the amount that exceeds the fair market amount of the goods or services given in return. This helps the donor to know his/her total tax deduction for the charity contribution.
When a donor requests for a donation receipt. This could be due to his/her company’s reasons or rules. For instance, some donors have the rule that every donation must have a donation receipt. This enhances transparency on donations and record keeping.
Exemptions About Non-profit Receipts
Insubstantial goods and services: Sometimes the nonprofit organization offers goods and services to the donor in exchange for the donation, but their description is not included in the donation (nonprofit) receipt. These tokens are referred to as insubstantial. For instance, tokens like mugs and calendars bearing the nonprofit organization logo are considered low-cost gifts or items which on the fair market does not exceed 2 % of the payment.
Membership: The IRS demands that when a donor donates exchange to membership on annual events, the organization should not provide a donation (non-profit) receipts. The IRS considers this as free admission to membership on the events.
Format of a Non-Profit Receipt
The word donation (non-profit) receipt: This word must be included at the top of this document. This shows that it is a donation receipt.
Non-profit organization details: It is also a must part of this receipt. It includes the organization logo, name, federal tax ID number, and a statement that verifies that the organization is registered with 501(c)(3). In this section also the receipt can include a statement indicating that the receipt was given because of a donation given to help the charitable organization beneficiaries.
Donor’s details: This is another part of a non-profit receipt. It includes the name of the donor, address, email or any other donor’s details.
Date: The date of donation must be included in this receipt.
Donation description: This is the most important section of a non-profit receipt. It can be laid in rows and columns. This is where the organization describes the donation received. Either the amount of money received or the description of every item received. The organization is not allowed to indicate the monetary value of the items. It is the work of the donor to indicate the value of the items donated.
Added information: In this section, the organization indicates whether the donor received a token for the donation or not. If no goods or services were offered in return, they must say so. And if there are goods provided, then the organization must provide the value in good-faith. Another disclosure requirement can also be indicated in this section if need be.
Signature: The organization must provide a signature and name that belongs to an authorized organization board member.
Non-profit Receipt Templates
When Non-Profits Require to Give Receipts?
Record keeping: Nonprofits should always issue (non-profit) receipts to their donors no matter the amount of donation. This helps in keeping a record of donations that the donor has made. It also helps keep track of the charitable organization details. This also helps the nonprofits to keep track of their donations and the donor’s details.
Legal requirement: The IRS demands that nonprofit organizations provide non-profit receipts for single donations worth $250 or more. Also, the nonprofit is required to give receipts for a donation worth $75 or more and in return, the donor receives goods or services for the donation. The nonprofit should disclose the value of the token given to the donor in good-faith.
Donor’s request: The nonprofit should give a receipt to the donor if the donor requests a receipt.