A Donation Receipt (also called a Charitable Contribution Receipt, Gift Acknowledgment Letter, or Tax Donation Receipt) is a written document issued by a qualified nonprofit organization to a donor confirming receipt of a charitable contribution. The receipt serves as the donor's substantiation for claiming a federal income tax deduction for charitable contributions under Internal Revenue Code Section 170.

The IRS imposes specific documentation requirements for charitable deductions. Under IRC Section 170(f)(8), any single charitable contribution of $250 or more requires a contemporaneous written acknowledgment from the donee organization. The acknowledgment must be obtained by the donor on or before the earlier of the date the tax return is filed or the due date (including extensions) for the return. For contributions of property valued at more than $500, the donor must also file IRS Form 8283. For non-cash contributions exceeding $5,000 (other than publicly traded securities), a qualified independent appraisal is required under IRC Section 170(f)(11).

The Tax Cuts and Jobs Act of 2017 raised the standard deduction substantially, reducing the number of taxpayers who itemize deductions. However, for those who do itemize (and for the temporary above-the-line deduction for cash contributions that applied in 2020-2021), proper donation receipts remain essential. Nonprofit organizations have a legal and ethical obligation to provide accurate receipts, as the IRS has denied deductions and assessed penalties where organizations issued receipts that did not meet the statutory requirements.

A Donation Receipt is needed in the following situations: when a donor makes a cash contribution of $250 or more to a qualified 501(c)(3) organization and needs the required written acknowledgment for tax deduction purposes; when a donor contributes non-cash property (clothing, household items, vehicles, artwork, real estate) to a charitable organization; when a business makes a corporate charitable contribution and needs documentation for its tax records; when a donor participates in a fundraising event where the ticket price includes both a contribution and a benefit (quid pro quo contribution), requiring the organization to disclose the deductible amount; and when a donor makes a contribution through a donor-advised fund, charitable remainder trust, or other giving vehicle.

Additional scenarios include planned giving situations where a donor makes a bequest or deferred gift, employee matching gift programs where the employer requires documentation from the nonprofit, in-kind donations of services or use of facilities (which are not deductible but may require acknowledgment for the organization's records), and stock or mutual fund donations where the receipt must document the number of shares and date of transfer rather than a dollar amount.

Failure to provide proper donation receipts has consequences for both the nonprofit and the donor. The IRS may disallow the donor's charitable deduction, as occurred in Durden v. Commissioner (2012), where the Tax Court denied a deduction of over $25,000 because the acknowledgment letter did not contain the required statement about whether goods or services were provided in exchange for the contribution. For nonprofits, failure to provide accurate receipts can jeopardize the organization's tax-exempt status.

A compliant Donation Receipt must include the following elements:

Organization identification -- the nonprofit organization's full legal name, address, and tax identification number (EIN). The organization should confirm its status as a 501(c)(3) tax-exempt organization.

Donor identification -- the donor's full legal name and address. For businesses, include the business entity name.

Date of contribution -- the date the donation was received by the organization, which determines the tax year in which the donor may claim the deduction.

Contribution description and amount -- for cash contributions, the exact dollar amount. For non-cash contributions, a description of the property donated (but not its value, as the IRS requires the donor, not the organization, to determine fair market value). For securities, include the name of the security, number of shares, and date of transfer.

Goods or services statement -- a statement of whether the organization provided any goods or services in exchange for the contribution. Under IRC Section 170(f)(8)(B), this statement is mandatory for contributions of $250 or more. If no goods or services were provided, the receipt must state this explicitly. If goods or services were provided (a quid pro quo contribution), the receipt must provide a good faith estimate of their fair market value.

Quid pro quo disclosure -- for contributions exceeding $75 where the donor receives something of value in return (such as a gala dinner, auction item, or merchandise), the receipt must disclose the fair market value of the benefit received, and the donor can only deduct the amount exceeding that value. This is required under IRC Section 6115.

Intangible religious benefits -- if the only benefit received by the donor is an intangible religious benefit (such as attendance at a religious service), this should be stated, as such benefits do not reduce the deductible amount.

Vehicle donations -- for donated vehicles, boats, or aircraft valued at more than $500, the organization must file IRS Form 1098-C and provide the donor with a copy within 30 days of the sale or use of the vehicle.

No goods or services for token gifts -- if the organization provided only token items (such as a bookmark, mug, or sticker) with a fair market value within IRS guidelines (currently under $12.50 or 2% of the contribution, whichever is less), the receipt may state that no substantial goods or services were provided.

Authorized signature -- the signature of an authorized representative of the organization, along with their title and the date the receipt was issued.