- 1 The importance of donation receipt:
- 2 What information should be included in a donation receipt?
- 3 Are all the donations qualified for goodwill donation receipts?
- 4 The legalities of donation receipts:
- 5 Things to avoid while giving donation receipts:
- 6 Conclusion:
The donation receipt template is given to the benefactor by a group, association or organization after the donation has been received. It serves as evidence that a benefactor had made a contribution whether in-kind or monetary.
The importance of donation receipt:
Donation receipt serve significant purposes for both benefactors and beneficiaries. Here is the list of essential reasons for donation receipts;
For the benefactors
- The benefactors will get deductions on tax returns by having donation receipt. They will get deductions from their taxes linked to charitable giving when they have documents to support their claim like donation receipt.
- It acts as proof that their donations have been obtained by the people or organizations which they have been given to.
- They will keep track of their donations, contributions, and finances by having all the donation receipts that they get.
For the beneficiaries (non-profit organizations)
- The donation receipt acts as legal documents or legal requirements for non-profit organizations or beneficiaries. When the IRS ask for the receipts and the organization isn’t able to present them, then on the basis of the cause of the donation they can be charged with a penalty.
- The beneficiaries use it to keep record of all the contributions they get as well as from where the donations came from.
- The donation receipts are used by the organizations as precise records while accounting all the finances.
What information should be included in a donation receipt?
In terms of the information, there are particular requirements which should be included in the receipt. All this information makes the donation receipt official and useful. Here is the information that should be included in the donation receipt;
- Name of the benefactor
- The date when the donation was donated
- The names of the group, organization or association and their federal TIN. In addition to this, a precise statement that states the group, organization or association is registered.
- Specify the amount that the benefactor has donated.
- A list and description of the item/s which have been donated in case the donation was not monetary.
- A statement that declares there were any services or commodities which had been provided in exchange for the contribution. It must also be stated there in case there was no exchange involved.
- A certified representative of the organization name and signature.
- A disclosure statement. It may vary so you should ensure that you are using accurate one in your donation receipt.
Are all the donations qualified for goodwill donation receipts?
No, there are specific gifts that absolutely require to be followed by a donation receipt. On the other hand, there are some which don’t. Following donations that are qualified for donation receipts;
- Monetary donations; these would add value to the charity or organization.
- In-kind donations; these can be used for the betterment or the beneficiaries of the organization.
Below donations are qualified for donation receipts;
- Donations that have been donated in return for an incentive or as a requirement
- Pledges and services given
- Gift certificates and lottery or raffle tickets
- Items that have been bought from a charity
- Donations that are provided to non-eligible recipients
- The use of vacation homes
The legalities of donation receipts:
Here are some legalities about when to give donation receipts;
- You have to provide a receipt for donations exceeding $250. This way, your donor will be able to claim tax deductions. However, it isn’t required by the law. But, this would be a good thing to provide to your donor that assist in establishing a good relationship between you.
- It is requirement by the law to provide a donation receipt for a donation of at least $75 that is used to purchase goods or services.
- If the donor or beneficiary asks for the donation receipt, then give them. It doesn’t matter what amount was provided to the organization.
Things to avoid while giving donation receipts:
When giving donation receipts to benefactors, here are some pointers to be able to avoid the common mistakes;
- For ALL charitable donations given to your organization, you are not required to issue receipts. The organizations usually provide receipts when the donation is of a specific amount or more. Some may give receipts for monetary donations not for donations in kinds. You just have to ensure to advise the donors on when you issue receipts. However, you are obligated to issue one if the donor asks for receipt.
- Use the money correctly whether or not you issue a receipt. For lower amounts of monetary donations, you may not issue receipts but it doesn’t mean you can spend it any way you wish. Bear in mind that all donations are made to assist the organization or the cause. Therefore, use the money for that purpose only.
- If the donation was given voluntarily, a donation receipt must be issued. With an actual intent of donating to the organization, the transfer of amount or goods has been completed and the donor has provided the donation.
- In the donation receipt, the eligible amount of the donation must be accurately indicated. The worth of the goods or services must be deducted from the amount written on the receipt in case the beneficiary gets something in exchange for the amount given.
- You have to ensure that your donor and only write his, her or their name in your donation receipt.
- Furthermore, you have to make sure all the members of your organization know the rules of correct receipting.
- Finally, you should be well aware of all the donation receipts you are giving out.
In conclusion, a donation receipt template is a document which serves as evidence that a benefactor had made donation. The organization or a group issues this receipt to the benefactor after the donation has been obtained.