by Patrick Bradley: When a business or individual donates something, send them a church donor acknowledgement letter for their tax records.
A local coffee shop has generously offered to provide coffee and muffins for your workers at a community service event. How exciting! All they want in return is a tax receipt so that they can write off the donation when they file their business return next year.
One of the first financial systems you set up for your church is keeping track of cash tithes & offerings so you can mail out giving statements to your supporters and members. You can include non-cash donations in those annual giving statements, but the receipt you give them right away is different when the donation isn’t monetary (cash/check/ACH/card).
The Church Donor Acknowledgement Letter
All other things being roughly equal, I see 2 main differences in a church donor acknowledgement letter:
No Dollar Amount
You describe the donation but do not valuate it. That actually makes your job a whole lot easier. It’s up to the donor to determine its value when they file their taxes. All you have to do is record what was given.
For tithes and offerings to a church, you should include the language:
No good or services were provided by our organization in consideration of this donation apart from intangible religious benefits.” (or similar)
You finally got that shoe store to donate 20 pairs of shoes to your church for your back-to-school community service project. They should absolutely get a receipt, but they probably didn’t give the shoes for “intangible religious benefit.” Your church donor acknowledgement letter can omit the last part of the disclaimer.
What to Include
According to the IRS, your church donor acknowledgement letter must include:
your church’s name
description (but not value) of the non-cash contribution
a statement that no goods or services were provided by your church
…and I would recommend adding:
When This Doesn’t Apply
You’ll need a 3rd version of a donation receipt if you’ve given the donor anything worth more than $10 at the time they made their cash or non-cash donation.
For instance, you do a fundraiser dinner and charge $50 a plate at the door. If the cost of the dinner is $15, you need to disclose that, and they’ll only get to write off $35 on their taxes. Or maybe you send each of your outside supporters a year-end photo book of the life of your church as a special thank-you. Keep it under $10 or it has to go on the giving statement.
There are still plenty of generous individuals and business owners out there willing to do good in the community through a church. There’s no reason you can’t send them a thank you letter that also serves as their tax receipt.
So use these guidelines to draft yours today or check out this free template from Passion for Planting to get you started.
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