A 501(c)(3) donation receipt is necessary for charitable organizations when they receive gifts valued at $250 or more. This receipt is used by individuals who have made donations in cash, payment, personal property, or a vehicle and wish to claim the donation as a tax deduction.

Organizations often issue a comprehensive receipt summarizing all donations throughout the year. This document helps donors track their total annual contributions, which can be deducted from their gross income when filing taxes.

What is 501(c)(3) Non-Profit?

A 501(c)(3) is a specific type of organization or corporation categorized as a charity, eligible to receive charitable contributions. Contributions to a 501(c)(3) are tax-deductible if given before the end of the tax year, with the condition that a pledge or promise to pay doesn't qualify.

To attain the 501(c)(3) status, organizations must undergo a thorough approval process by the IRS. When an organization is certified as a 501(c)(3), a common designation for well-known charitable entities, donors can confidently contribute, knowing their donations may be tax-deductible.

501(c)(3) Donation Receipt Requirements

To comply with Page 2 of IRS Publication 1771, a donation receipt must include the following key elements:

1. Name of the Charity: Clearly state the name of the charitable organization.

2. Date of Contribution: Specify the date on which the donation was made.

3. Amount ($) of the Contribution: Indicate the monetary value of the contribution.

4. Acknowledgment: Explicitly state that "no goods or services were provided as part of this donation."

No Goods or Services Provided for Tax Deduction

Donors cannot deduct payments made for goods or services, even when contributed to a 501(c)(3) organization. For instance, fees paid for charity dinner events are not tax-deductible. However, separate cash donations made during such events can qualify for deductions.

Less than $250: Individual donations up to $250 in a single instance do not require a receipt. For amounts below $250, a person can make multiple trips for donations without needing proof. Once the cumulative donation amount reaches $250 or more, a receipt becomes necessary (26 U.S. Code § 175(f)(8)(A)).

More than $500: Donations exceeding $500 must be fully described (26 U.S. Code § 175(f)(11)(B)).

More than $5,000: For donations valued over $5,000, the property must be assessed by a "qualified appraiser." While not precisely defined, donors are encouraged to use their best judgment ( 26 U.S. Code § 175(f)(8)(C)).

Maximum Tax Deduction: Individuals can deduct up to 50% of their adjusted gross income (line 36 on IRS Form 1040 Schedule 1) (26 U.S. Code § 170(b)(1)(B)).

Verifying 501(c)(3) Charity Status in 3 Simple Steps

1. Visit the IRS Website: Navigate to the official IRS website.

2. Enter Entity Name: Input the name of the organization in question.

3. Review Listings: Explore the provided listings to confirm the 501(c)(3) status.

Before contributing to a non-profit, ensure its IRS classification as a 501(c)(3). Failure to do so may impact the donor's eligibility for tax deductions. Verification can be done through two options:

• Option 1: Download Publication List 78

• Option 2: Verify Online (Follow the instructions below)

Step 1: Navigate to the IRS Website

Visit the IRS website and locate the 'Tax Exempt Organization Search' (EOS App) button prominently in dark blue.

Step 2: Enter the Entity Name

Initiate a search by entering the organization's name or its Employer Identification Number (EIN). For organizations with national reach and local branches, optimize the search using location filters such as State or City.

Step 3: Verify Status

While an organization may surface in the search results, it's crucial to delve deeper. Click on the organization's name to reveal its status with the IRS. Look for the statement "On Publication 78 Data List: Yes" to confirm its legitimate 501(c)(3) non-profit status.

FAQs

What is an example of a donation receipt?

A well-crafted donation receipt message might read: "We extend our sincere gratitude for your generous cash donation of $300 received by (organization's name) on December 12, 2015. Please note that no goods or services were provided in exchange for your contribution.”

What is the format for donation receipt for income tax purposes?

There isn't a fixed format for donation receipts, but it should encompass all essential details for the donor to claim a tax deduction and for the charity to maintain an accurate record of the donation.

How do I invoice a donation?

What to include on your invoice for a charitable donation:

1. The donor's name.

2. The name of the nonprofit or charity (including the gift officer's name and title, if applicable).

3. The date of the donation.

4. The donation amount.

5. A signature from the nonprofit or charity, verifying the invoice.

How do I write a letter of donations?

When crafting a letter requesting donations, keep in mind these key tips:

1. Personalize your donation request letter to make it more engaging.

2. Avoid assuming the reader is already familiar with your cause; provide relevant information.

3. Tell a compelling story to evoke empathy and understanding.

4. Express gratitude in advance to show appreciation for their potential support.

5. Segment your donors, tailoring your message to specific groups if applicable.

6. Include a clear call to action, guiding recipients on how to contribute.

Sample For 501(c)(3) Donation Receipt