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A complete guide to writing donor acknowledgement letters

December 10, 2022
A donor smiles at an electronic acknowledgment letter she received on her laptop.

Donors are the backbone of your nonprofit organization. Not only do they advocate on behalf of your cause, but their support allows you to pursue your purpose. 

When you show donors that their contributions have a real impact, they are more likely to become active, long-term members of your community. That’s why thanking your supporters is crucial to your stewardship efforts, and there’s no better way to do this than by sending them a donor acknowledgment letter!

In this article, we’ll cover everything you need to know about writing an effective donor acknowledgment letter, so you can effectively thank donors and inspire their continued support.

Common questions about donor acknowledgment letters 

To ensure your organization is sending the best possible donation acknowledgment letters to your valued supporters (and providing the necessary information required by the IRS,) here are some frequently asked questions to consider.

1. Why is it important to acknowledge donors? 

Acknowledgment is one way to express gratitude for a donor’s generosity and support. Donors who feel valued will be more likely to remain committed to your organization and give again. 

With a comprehensive donor acknowledgment letter strategy, you can even regain lapsed donors. When they’re reminded of the impact of their gifts, they’ll be inspired to reconnect with your cause.

2. 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 a donation acknowledgment letter is.

In general, there are two types of gift acknowledgments nonprofit organizations extend to their donors:

  1. Thank-you messages: These basic messages expressing gratitude to individuals for making a gift are valuable stewardship tools. When your donors feel that their contributions are appreciated, they’re more likely to stay involved with your organization.
  2. Donation acknowledgments: Either sent as formal letters or emails, these IRS-mandated receipts must be issued for gifts larger than $250. Donors may use these to write off their contributions on their tax returns.

Thank-you messages are valuable tools your nonprofit organization can use to boost donor retention. Because formal donor acknowledgment letters are necessary for supporters to correctly file their tax returns, these communications should be even more carefully crafted.

3. What are the requirements for donation acknowledgment? 

The U.S. federal government has a set of standards for what information must be included in a donor acknowledgment letter. This information provides proof of giving and allows donors to write off their contributions on their tax returns.

A formal donor acknowledgment letter should include the following information:

  • IRS tax-exempt status: Include your tax-exempt status as a 501(c)(3) or other type of government-recognized charitable organization as well as your Employer Identification Number (EIN) so the donor may verify your status as a recognized nonprofit.
  • Name of the donor: Address your donor by name so they can avoid confusion when filing their taxes (and so that the IRS can spot fraudulent filings.) You should also include your nonprofit organization’s full, legal name.
  • Date the gift was received: Remember, you’ll need to send a separate letter for each individual gift a donor makes to your organization. You can’t simply send a mass acknowledgment letter with the dates of all gifts made during that year.
  • Description of the donation: For cash gifts (including cash, checks, credit/debit card payments, and payroll deductions,) this description is the monetary value of the donation you receive. For in-kind gifts of goods or services, simply describe the gift without assigning it a cash value.

In addition to these details, your nonprofit organization will also need to acknowledge any goods or services you provided to donors in exchange for their gift. For most organizations, this would be something like a member t-shirt, a thank-you mug, or a small gift card.

4. When should a donation acknowledgment letter be sent? 

To ensure IRS compliance, aim to have your donor acknowledgment letters delivered by January 31. That way, your donors will have plenty of time to file their taxes and prove that their contributions were tax deductible. 

While you do have some breathing room, especially after the intensity of the year-end fundraising season, we recommend sending out donor acknowledgment letters shortly after each gift is made. This keeps the gift fresh in your donors’ minds, giving you the opportunity to connect with donors sooner and begin building relationships. 

5. How should a donor acknowledgment letter be formatted?

There is a clear formula for writing a donor acknowledgment letter. Consider using the following format: 

  • Letterhead: Include your nonprofit organization’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.
  • Salutation: Warmly address your donor by their preferred name. While this is a formal letter, be sure not to alienate supporters with impersonal language or incorrect assumptions about their identity.
  • First paragraph: Immediately thank donors for their gift. Clearly state your nonprofit organization’s official name and make your tax-exempt statement.
  • Second paragraph: Note the details of their gift including its cash value, a description of the contribution, and the date it was made.
  • Third paragraph: Acknowledge whether goods or services were rendered in exchange for your donor’s support.
  • Final paragraph: Thank your donor again and outline how their donation was used to further your purpose. State how important their support will be to your cause moving forward.
  • Valediction: Warmly wish your donor well and include a key member of your nonprofit organization as the signatory, like your development director, major gift officer, or executive director.

Above all, ensure your letter is brief and easily scannable. You want your donors to immediately recognize that this letter is a formal donation acknowledgment so they don’t disregard it as junk mail or a generic engagement letter.

Tips for a successful donor acknowledgment letter 

When building a donor acknowledgment strategy, a few tips and tactics your team should keep in mind include: 

  • Customizing your letter. Send out personalized acknowledgment letters to different segments of your donor community such as first-time donors, returning givers, individuals who received gift matches, and recurring donors. 
  • Delivering the letter through email. To save your organization time and money, provide an option for donors to receive email acknowledgment letters. 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.
  • Automating your donation acknowledgment letters. With effective fundraising tools like automated donation acknowledgments, your team can build donation acknowledgment templates that automatically populate the correct donor information without manual input. That way, you can schedule formal donor acknowledgment letters to be sent out annually prior to that year’s tax filing deadline. 

Now that you’ve reviewed these tips, you can get started revitalizing your own acknowledgment letters!

Donor acknowledgment letter template

Check out our donor acknowledgment letter template to get an idea of how to format your upcoming correspondences:

Dear [Donor Name,]

Thank you so much for your support over the last year. Donors like you are vital to [Organization Name] and the achievement of our purpose. As a tax-exempt organization outlined in Section 501(c)(3) [or other appropriate section] 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 all of us at [Organization Name,] we want to extend our deep appreciation for your donation. With 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 purpose of [organization’s mission or vision statement.

With warm wishes and gratitude,

[Signature of Signatory]

[Printed Name of Signatory]

[Signatory’s Official Title]

Keep in mind that donor acknowledgment letters shouldn’t be the end of your outreach efforts. In the days or weeks after their gift, follow up with additional ways donors can get involved, like having their gift matched by their employer or becoming a volunteer. Your nonprofit organization can also send donors updates about how their gifts are being used to convey your genuine appreciation and drive continued support.

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