March 21, 2025

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In addition to maintaining a gift acceptance policy, a nonprofit should also maintain a charitable gift receipt template that it fills out and gives to a donor once it accepts a gift (both cash and in-kind gifts). Donations to tax-exempt organizations should only be deducted on a donor’s federal income tax return if the donor receives a receipt from a tax-exempt organization that serves as evidence that the donor contributed to a tax-exempt organization.  

Before explaining what information the IRS requires to be included in a charitable gift receipt, it is important to highlight that the act of incorporating a nonprofit is generally not sufficient for the IRS to recognize a nonprofit as tax-exempt.¹ Rather, a nonprofit must apply for tax-exempt recognition with the IRS by filing Form 1023.² Until the IRS recognizes an organization as tax-exempt under Section 501(c)(3) of the Internal Revenue Code, that organization should not tell potential donors that it is tax-exempt. Therefore, donors do not have advanced assurance that their gifts to a nonprofit are tax-deductible until the IRS has recognized the nonprofit as a tax-exempt organization. Even so, tax-exempt recognition is retroactive to an organization’s date of incorporation (i.e., the date that a state approves an organization’s articles of incorporation) if the organization files its exemption application within twenty-seven months of formation. Thus, donations to a nonprofit can be treated as tax-deductible contributions even if the contributions occurred before the IRS recognized the nonprofit as a tax-exempt organization.³ Alternatively, contributions will not be deductible if the IRS rejects a nonprofit’s exemption application.  

The IRS requires specific information to appear in a charitable gift receipt, including the name of the tax-exempt organization, the amount of cash or a description of the property gifted to the organization, and a statement that no goods or services were provided in return for the gift. Nonprofits should provide the charitable gift receipt to donors by January 31 of the year following a donation so that donors have evidence of their donation prior to completing their federal tax return on April 15 of the year following the donation. If the donor makes a donation through a donor-advised fund (“DAF”), the DAF, and not the nonprofit, provides the charitable gift receipt. Even so, it is appropriate for the nonprofit to send an acknowledgement letter to thank the donor for the gift.

Generally, a nonprofit should provide a charitable receipt to donors for cash gifts of at least $250.00 and cash gifts of at least $75.00 if a nonprofit provides anything of value to the donor in return for the contribution (i.e., a quid pro quo contribution), although many nonprofits provide receipts to donors for gifts of any size. Pursuant to best practices (and IRS requirements), the gift receipt should include:  

• the amount of the contribution or a description of any property donated,  

• a description of any goods or services provided in return for the donation (or a statement that no such benefits were provided), and  

• a good faith estimate of the value of such goods or services provided by the nonprofit in return for the donation (if any).⁴  

An example of a quid pro quo contribution (i.e., receiving anything of value in return for a contribution) is when a donor gives $100.00 to a nonprofit and receives a steak dinner valued at $45.00 in return for the cash donation. In this example, the charitable contribution portion of the gift is $55.00. Even though the portion of the gift that is available for deduction on a tax return does not exceed $75.00, the nonprofit must provide a charitable gift receipt because the donor's gift of $100.00 exceeds $75.00.⁵ Failure to provide a gift receipt can cause the contribution to be nondeductible and can lead to the imposition of penalties on the nonprofit. For quid pro quo contributions, the IRS imposes a penalty of $10.00 per contribution, up to $5,000.00 per fundraising event, for failure to provide a receipt.⁶ While there is no legal requirement to provide gift receipts for contributions under $250.00 (or less than $75.00 if the donor receives something of value in return for the contribution), as mentioned above, many nonprofits provide gift receipts to donors for gifts of any size.  

For in-kind gifts (i.e., noncash gifts), a nonprofit should describe the donated gift in the gift receipt (e.g., “the real property located at 123 Main Street,” “a 2023 Chevrolet Corvette,” or “20,000 shares of Tesla, Inc. stock”), but it should not attempt to assign the cash value of the gift or even include any appraised value that may have been provided by the donor. Rather, the donor is responsible for determining the value of his or her gift.⁷ For that reason, a nonprofit’s gift acceptance policy should explain that it will not appraise real property and other in-kind gifts.⁸  

In-kind gifts that have an insubstantial value as described in Revenue Procedures 90-12 and 92-49 given to a donor by a nonprofit in exchange for the donor’s contribution do not need to be described in the gift receipt. A service or good has an insubstantial value if it meets one of the following two tests.⁹

1. the fair market value of the goods and services the donor receives does not exceed the lesser of 2 percent of the donor’s payment or $125, or  

2. the donor’s payment is at least $62.50, the only goods or services the charitable organization provides bear the organization’s name or logo (e.g., calendars, mugs, posters), and the cost of these items, in the aggregate, is within the limit for “low-cost articles,” which is $12.50.

An example of an insubstantial gift that does not need to be described in a gift receipt is a zoo giving out lapel pins, valued at $0.25, to donors in return for contributions of $15.00 or more.¹⁰  

Alternatively, some in-kind gifts can never be classified as a charitable contribution to a nonprofit, including the value of a person’s time or services and clothing or household items that are not in good used condition.¹¹  

For more information on the acceptance of noncash donations, check out Napa Legal’s resource “How Religious Nonprofits Can Best Plan to Accept Noncash Charitable Contributions.”

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IRS guidance suggests that gift receipts should contain the following information:

1. A statement that the nonprofit is a public charity recognized as tax exempt by the IRS under the Internal Revenue Code’s Section 501(c)(3).

2. Either (a) amount donated (if cash or cash equivalents); or (b) description of the property donated (as described above, a nonprofit should not attempt to assign the cash value of noncash gifts because doing so is the donor's responsibility).

3. The date the nonprofit received the donation.

4. Either:  

(a) a statement that the nonprofit did not provide more than insubstantial goods or services in return for the donation, such as, "No goods or services were received in return for this gift"; or 

(b) if the gift was $75 or more and the nonprofit provided something of more than insubstantial benefit in return for the gift (such as attendance at an event where donors receive a meal), then the nonprofit must provide a good faith estimate of the value of the goods/services provided by the nonprofit to the donor, such as the actual cost of the dinner (even if the food was donated to the nonprofit).

5. If a nonprofit only provides intangible religious benefits in return for the contribution, it should include a statement saying as much. Intangible religious benefits are benefits that are provided by a nonprofit organized exclusively for religious purposes that are not usually sold in commercial transactions outside of a gift context. Examples of intangible religious benefits include admission to a religious ceremony and a de minimis tangible benefit, such as sacramental wine used for the Holy Eucharist. Benefits that are not intangible religious benefits include consumer goods, travel services, and education leading to a recognized degree.¹²  

For more details from the IRS on charitable contributions, refer to IRS Publication 1771.¹³ Publication 526 also includes relevant details regarding charitable contributions.¹⁴  

Below is a template charitable gift receipt letter to use with donors, which is required for all gifts of at least $250.00 and any quid pro quo contribution of cash or property with a value of more than $75.00.  

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Charitable Gift Receipt Template

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¹ Churches (including temples, mosques, and synagogues), integrated auxiliaries of churches, conventions or associations of churches, and organizations (other than private foundations) that have gross receipts in each taxable year normally not more than $5,000 are not required to file Form 1023 to be recognized as tax-exempt by the IRS, although many of these organizations choose to file an exemption application to receive a tax-exempt determination letter from the IRS that it can show donors.

² A nonprofit may be eligible to apply for tax-exempt recognition by filing a Form 1023-EZ. Read the instructions for Form 1023-EZ to determine whether your nonprofit is eligible to use Form 1023-EZ. https://www.irs.gov/pub/irs-pdf/i1023ez.pdf. Additionally, a Catholic nonprofit may apply for tax-exempt recognition through the United States Conference of Catholic Bishops using Form 0928A.

³ https://www.irs.gov/charities-non-profits/form-1023-purpose-of-questions-about-organization-applying-more-than-27-months-after-date-of-formation.

⁴ https://www.irs.gov/charities-non-profits/substantiating-charitable-contributions.

⁵ Id.

⁶ Id.

⁷ For more details on accepting noncash contributions, read the following Napa Legal white paper by Christian Matozzo: https://www.napalegalinstitute.org/member-resources/how-religious-nonprofits-can-best-plan-to-accept-noncash-charitable-contributions.

⁸ The University of Notre Dame’s Hesburgh Libraries use the following language in its Gift Policy: “By law, the Hesburgh Libraries may not provide appraisals or valuations of gifts. Donors who wish to have an appraisal completed must make arrangements and pay for the service with an independent appraiser. The Hesburgh Libraries can provide donors with a list of appraisers in their area.” https://www.library.nd.edu/hesburgh-libraries-gift-policy/.

⁹ https://www.irs.gov/pub/irs-pdf/p1771.pdf. These tests use dollar amounts from 2023. See IRS.gov for annual inflation adjustment information.

¹⁰ See Revenue Procedure 90-12.

¹¹ See Publication 526.

¹² https://www.irs.gov/pub/irs-pdf/p1771.pdf.

¹³ https://www.irs.gov/pub/irs-pdf/p1771.pdf.

¹⁴ https://www.irs.gov/pub/irs-pdf/p526.pdf.

¹⁵ If the donor uses a donor-advised fund, the donor-advised fund, and not the nonprofit, will notify the donor that his/her contribution is deductible for federal income tax purposes. The nonprofit should eliminate all references in the template that the gift is tax-deductible. The nonprofit can instead include the following language in a letter: “This is not a tax receipt. You may be eligible to claim a tax deduction for your contribution to the organization that sponsors your donor-advised fund.”