Years ago, when I was a school-based development director at a large research university, part of my job was to draft thank you letters for my dean for the gifts that came in. Elsewhere in the University, acknowledgements of receipt of the gift along with appropriate tax information (substantiation or quid pro quo statements where appropriate or indications of how the gift was received—ie: through your donor advised fund) were generated.
As I moved to smaller organizations, I integrated these practices for smaller gifts—a thank you letter from the CEO with the appropriate tax information in the footer. Larger gifts also got acknowledgements, but in addition I would have my Board or the appropriate program staff (and often all of the above) write thank yous. I would also, on a regular basis, have them thank smaller but loyal donors for their support. And, wherever I was personally involved in the process, I would handwrite my own thanks.
In both my consulting and my training practices, I’ve been surprised (perhaps shocked would be a better word) at how few organizations send acknowledgements OR thank you letters. Those that do, invariably only send one.
So let’s review good practices—and what is required.
The IRS requires donors who give $250 or more to one organization in a calendar year to have a substantiation statement from the organization stating that no goods or services were received by the donor as a result of the gift in order for the donor to claim a tax deduction. Note that this is $250 over the year—so someone who gives you $25 a month, qualifies. The IRS also requires that this statement be made “contemporaneously”—that is, at the time the gift was received.
The IRS does NOT require the nonprofit to actually do this; the onus is on the donor. It seems to me, however, that the wise fundraiser takes care of his or her donors in ways large and small—including making sure they have any necessary information so they can legally take a charitable tax deduction.
Quid pro quo statements—where a good or service is received in exchange for a donation—are required for contributions of $75 or above. And here the nonprofit is on the hook. Fail to provide this and you could face a penalty. Your quid pro quo must state that only difference between the total contribution and the fair market value of whatever was received is eligible for a charitable tax deduction. So your statement must clearly state what that fair market value is.
Fair market value, according to the IRS is “the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts.”
If this is clear as mud, check out http://www.irs.gov/publications/p526/ar02.html for all the details.
Them’s the facts. Beyond facts, of course, are ways to better interact with our donors.
We all know the dismal stats on donor retention. More first time donors don’t hang around for a second gift than those that do. And fully a third of those that do, leave each and every year. Making a bit of an effort to show those donors how much they are appreciated isn’t just the right thing to do; it’s the smart thing.
Acknowledge each gift within 48 hours of receiving it. And then have a Board member, a client, your CEO, thank them for helping your organization and your clients. A few months later, send another thank you—this one showing and/or telling how their support is making a difference.
Donors who feel that their support matters, don’t leave. They continue to support you and, often, start supporting you at ever higher levels.
Janet Levine works with nonprofit organizations, helping them to build their resource development capacity. To learn more about her, her online grantwriting class and Get Ready, Get Set, Get Grants the only grantwriting book you really need, check out http://janetlevineconsulting.com. You can buy the book directly at http://tinyurl.com/2996pqg