Thanking donors the way the IRS requires

This guide is for whoever sends the thank-you notes: the treasurer, the founder, the volunteer with the donor spreadsheet. A good thank-you does two jobs. It tells a donor their gift mattered, and for many gifts it is also the paperwork the donor needs to claim a federal tax deduction. After reading, you'll know what the IRS expects in that paperwork, when you owe a donor an extra statement, and the few things you should never put in writing.

If you want ready-made wording, use our donor thank-you letter and receipt template. This guide explains the rules behind it.

The $250 rule: the written acknowledgment

A donor can't deduct any single gift of $250 or more unless they have a contemporaneous written acknowledgment from your charity. That's the IRS name for a thank-you letter, email or receipt that contains certain facts and reaches the donor in time (IRS Publication 1771).

Strictly speaking, getting the acknowledgment is the donor's responsibility, and the IRS doesn't penalize a charity that fails to send one (donated cars, boats and planes worth over $500 are an exception, with their own rules and penalties). But the donor loses the deduction, and Publication 1771 says the charity "must assist" by providing it. In practice, send one for every gift of $250 or more, every time.

What it must say

According to Publication 1771, the acknowledgment must include:

• your organization's name
• the amount of any money given (cash, checks, cards, online payments and similar)
• a description, but not the value, of any property given, such as "two boxes of children's books"
• a statement that you gave no goods or services in return, if that's true
• if you did give something in return, a description of it and a good-faith estimate of its value
• if all you gave was an intangible religious benefit, a statement saying so

You don't need the donor's Social Security number for this acknowledgment. Donated vehicles are different; see our guide to noncash gifts. There is no IRS form for this. A letter, postcard, email or computer-generated receipt all work, as long as the facts are there.

What "contemporaneous" means

The donor must receive the acknowledgment by the earlier of two dates: the day they file their tax return for the year of the gift, or that return's due date, including extensions. Publication 1771 notes that charities typically send acknowledgments by January 31 of the following year. Sending one within a few days of the gift is better for the relationship anyway.

One gift, not a year's worth

The $250 test applies to each single gift. Publication 1771 says separate gifts under $250 are not added together. A donor who gives $50 a month has no single gift of $250 or more, though they still need their own bank record or a receipt from you to deduct each gift. For payroll gifts, each deduction from a paycheck counts as a separate gift for the $250 test.

Gifts where the donor gets something back

A quid pro quo contribution is a payment that is partly a gift and partly a purchase, like a gala ticket that includes dinner. The donor can deduct only the part above the value of what they received.

When a donor pays more than $75 this way, you must give them a written disclosure statement. Per Publication 1771, it must:

• tell the donor that the deductible amount is limited to what they paid minus the value of the goods or services they got, and
• give a good-faith estimate of that value.

You can give the statement when you ask for the money (on the invitation, for example) or when you receive it. It must be in writing and easy to notice. The IRS warns that small print buried in a larger document might not count.

Note the threshold is the payment, not the deductible part. In the IRS's own example, a donor pays $100 for a concert ticket worth $40. Only $60 is deductible, but because the payment was over $75, the charity owes the disclosure.

Good-faith estimate means a reasonable, honest method. The IRS accepts any reasonable method used in good faith. For things not sold commercially, you can use the price of something comparable. If a dinner at your event is like a dinner at a local banquet hall, use what that would cost.

Penalty: a charity that fails to make a required disclosure can be fined $10 per contribution, up to $5,000 per fundraising event or mailing, unless it can show reasonable cause (IRS Publication 1771).

Small thank-you gifts that don't count

Some items are so small in value that you can ignore them and say "no goods or services were provided." Publication 1771 describes these exceptions (the token-item rules also require that you tell donors how much of their payment is deductible):

• Token items. During a fundraising campaign, if the donor's benefits are worth no more than 2% of their payment or a set dollar cap, whichever is less. Or, if the donor pays at least a set minimum and gets only low-cost items with your name or logo, like a mug or calendar.
• Unordered low-cost items you mail to people who didn't ask for them, such as address labels or greeting cards.
• Membership benefits given for an annual payment of $75 or less, such as free admission, parking or gift-shop discounts.

The dollar limits change every year for inflation. For 2026, the IRS set them in Revenue Procedure 2025-32:

So a donor who gives $75 and receives a logo mug that cost you $10 can be told no goods or services were provided. Check the IRS each year, since these amounts go up.

Intangible religious benefits

If a congregation or other organization run only for religious purposes gives only an intangible religious benefit, like admission to a religious service, the acknowledgment doesn't need to describe or value it. It just says that's all the donor received. Publication 1771 is clear that this doesn't cover things sold commercially, such as tuition toward a degree, travel or consumer goods.

Volunteers who pay their own expenses

Volunteers can't deduct the value of their time (IRS Publication 526). Some can deduct unreimbursed out-of-pocket costs of serving, such as gas for driving to volunteer. Publication 526 allows 14 cents a mile in place of actual car costs.

If a volunteer's unreimbursed expenses for a single contribution reach $250 or more, they need an acknowledgment from you. Per Publication 1771, it should describe the services they gave and say whether you gave anything in return (and, if so, describe and estimate it). The IRS list doesn't include the dollar amount they spent; they keep their own receipts for that.

What not to do

• Don't put a value on donated property. Describe it only. Valuing it is the donor's job. See our guide to noncash gifts.
• Don't promise a deduction. Whether a gift is deductible depends on the donor's own taxes. Say what was given and what was received; let their tax preparer do the rest.
• Don't value the donor's time or label volunteer hours as a donation on a receipt.
• Don't backdate. Date the letter the day you write it, and state the date you received the gift.

Year-end summaries

Publication 1771 allows one acknowledgment, such as an annual summary, to cover several gifts, as long as it includes the required facts. A January letter listing each gift, its date and amount, with one "no goods or services" statement (or the right disclosure for each event ticket), works well for monthly and repeat donors. Many donor databases can produce these.

Keep a copy of everything you send, in line with your document retention policy.

A worked example

Here's a hypothetical case. Maple Street Food Share holds a dinner in 2026. Tickets are $150. A comparable meal at a local banquet hall costs about $40.

• On the invitation: "Your ticket is $150. We estimate the dinner's value at $40, so the deductible amount is limited to $110." That's the quid pro quo disclosure, given at the time of asking.
• Afterward: a guest who bought two tickets ($300) gets a thank-you that names the organization, the $300 payment, describes "two dinner tickets," estimates their value at $80, and says only the amount over $80 is deductible.
• Same night: another guest hands over a $500 check without attending. Their letter states the $500 and says no goods or services were provided.

Acknowledgment checklist

• Every single gift of $250 or more gets a written acknowledgment
• Each acknowledgment names our organization and the amount, or describes the property
• Each says whether we gave anything in return
• Event invitations and tickets state the deductible amount for payments over $75
• We never state the value of donated property
• We check the IRS inflation figures for token items each year
• Repeat donors get a year-end summary by January 31
• We keep copies of every acknowledgment