Thanking donors the right way: IRS gift acknowledgments and receipts

The $250 rule

Under 26 U.S.C. § 170(f)(8), a donor can't deduct any single contribution of $250 or more unless they have a "contemporaneous written acknowledgment" from the charity. The law puts the burden on the donor, and your organization pays no penalty for not sending one (Pub. 1771). But without it, your donor loses the deduction, so in practice it is your job.

According to the IRS and Pub. 1771, the acknowledgment must include:

• The name of your organization.
• The amount of any cash (monetary) gift.
• A description, but not the value, of any property given.
• A statement that no goods or services were provided in return, if that is the case.
• If you did provide goods or services, a description and a good-faith estimate of their fair market value.
• If the only thing you provided was intangible religious benefits, a statement saying so.

There is no IRS form for this. Letters, postcards and computer-generated forms are all acceptable, and you can send it on paper or electronically, such as by email addressed to the donor. You do not need to include the donor's Social Security number or tax ID. The donor keeps it and does not attach it to their return (Pub. 1771).

Pub. 1771 gives sample wording, for example: "Thank you for your cash contribution of $300 that (organization's name) received on December 12, 2015. No goods or services were provided in exchange for your contribution."

Intangible religious benefits

If a church or other organization organized exclusively for religious purposes gives a donor only intangible religious benefits, the acknowledgment does not need to describe or value them. It can simply state that the organization provided intangible religious benefits to the donor.

Pub. 1771 describes these as benefits not usually sold in commercial transactions outside a gift context. Examples are admission to a religious ceremony and a small tangible item such as wine used in a ceremony. Education leading to a recognized degree, travel services and consumer goods are not intangible religious benefits.

Timing: what "contemporaneous" means

The donor must receive the acknowledgment on or before the earlier of the date they file their federal return for the year of the gift, or that return's due date including extensions (§ 170(f)(8)(C)).

Because you can't know when each donor will file, the IRS notes that charities typically send written acknowledgments no later than January 31 of the year after the gift (Pub. 1771). You can send one letter per gift, or one annual summary that covers several gifts.

Separate gifts and payroll deductions

The $250 test applies to each single contribution. Separate gifts under $250 are not added together. The IRS example is weekly church offerings under $250 each, even when the donor's yearly total is $250 or more (Pub. 1771). For those smaller gifts, the donor still needs a bank record or a written communication from you showing your name, the date and the amount.

For gifts made by payroll deduction, the donor can use a pay stub, Form W-2 or other employer document showing the amount withheld, together with a pledge card prepared by or for your organization. Each payroll deduction of $250 or more is treated as a separate contribution. If a single deduction is $250 or more, the pledge card or other document from you must also state that you provided no goods or services in return for payroll gifts, if that is the case.

Gifts over $75 where the donor gets something back

A "quid pro quo contribution" is a payment that is partly a gift and partly payment for goods or services, such as a dinner ticket or an auction item. When a donor pays more than $75 this way, 26 U.S.C. § 6115 requires you to give a written statement that:

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

You can give it when you ask for the gift or when you receive it. It must be in writing and likely to come to the donor's attention. Small print buried in a larger document might not qualify. The IRS example: a donor pays $100 for a concert ticket worth $40. Only $60 is deductible, but you must still give the statement, because the payment is over $75 (Pub. 1771).

The penalty under 26 U.S.C. § 6714 is $10 for each contribution without the required disclosure, up to $5,000 per fundraising event or mailing. It does not apply if the failure was due to reasonable cause.

No statement is needed when the benefit falls under the token, membership or intangible religious benefit exceptions, or when there is no gift involved, such as an ordinary gift-shop sale. A payment to a religious organization in return for only an intangible religious benefit is not a quid pro quo contribution at all.

Token benefits you can ignore (2026 amounts)

Some benefits are so small that the IRS treats them as having insubstantial value. You don't have to describe them, and you can say no goods or services were provided. This applies when the gift is part of a fundraising campaign, you tell the donor how much is deductible, and one of these is true (Pub. 1771):

• The value of what the donor gets is no more than 2% of the gift or $139, whichever is less, or
• The gift is at least $69.50, and the only items you give bear your name or logo (calendars, mugs, posters) and cost you no more than $13.90 in total, the "low-cost article" limit.

These are the amounts for taxable years beginning in 2026, from Rev. Proc. 2025-32, section 3.33. They change every year with inflation. Pub. 1771 still prints the 2023 figures ($125, $62.50 and $12.50), so don't copy numbers from it.

Unordered low-cost items you mail out for free, such as address labels or greeting cards, also count as insubstantial. So do annual membership benefits given for a payment of $75 or less, such as free or discounted admission, parking or gift-shop discounts.

What goes in which acknowledgment

Noncash gifts: describe, don't value

For gifts of property, your acknowledgment describes what you received but does not state its value (§ 170(f)(8)(B)). Valuing the gift is the donor's job. Pub. 561 is the IRS guide for donors and appraisers, and it says the charity receiving the gift cannot be the qualified appraiser.

If the donor's total noncash deduction for the year is over $500, they file Form 8283 with their return. For an item or group of similar items claimed at over $5,000, the donor completes Section B, and an official of your organization authorized to sign its tax returns (or someone specifically designated) signs the Donee Acknowledgment in Part V (Form 8283 instructions). The form itself says your signature "does not represent agreement with the claimed fair market value."

By signing, your organization also agrees that if it sells, exchanges or otherwise disposes of the property within 3 years, it will file Form 8282 with the IRS within 125 days and give the donor a copy. Items the donor identified on Form 8283 as worth $500 or less are excepted.

Donated cars, boats and airplanes

When a donor gives a vehicle with a claimed value over $500, you file Form 1098-C with the IRS and give the donor Copy B, or your own acknowledgment with the same information. Without it, the donor can't deduct more than $500 (Form 1098-C instructions).

It must reach the donor within 30 days of the date you sell the vehicle. If instead you will make significant use of it, materially improve it, or give or sell it well below value to a person in need, the 30 days run from the date of the gift. If you sell it without using or improving it, the donor's deduction is generally limited to your gross proceeds, and you must certify the sale was at arm's length (§ 170(f)(12)). The law also sets penalties for knowingly furnishing a false acknowledgment or failing to furnish one on time. The IRS has separate guides for vehicle programs: Pub. 4302 for charities and Pub. 4303 for donors.

What isn't deductible: time and talent

Volunteers can't deduct the value of their time or services, or income they lose while volunteering (Pub. 526). Don't put a dollar value on volunteer hours in a tax acknowledgment.

Volunteers may be able to deduct out-of-pocket costs that are unreimbursed, directly connected with the service, incurred only because of it, and not personal, living or family expenses. If a single such expense is $250 or more, the volunteer needs an acknowledgment from you describing the services they gave and stating whether you gave anything in return (Pub. 1771).

One more reason acknowledgments matter more now: beginning with tax year 2026, people who don't itemize may deduct up to $1,000 ($2,000 if filing jointly) of cash gifts to certain qualified organizations (IRS Tax Topic 506). More of your donors may be keeping your receipts.

If AI drafts your thank-you letters

AI can write a warm letter fast. But the parts the IRS cares about are facts, and they have to come from your giving records, not from the model. Before anything goes out, a person should check:

• The amount. It must match what was received, to the cent. A letter that rounds, guesses or repeats last year's figure is wrong.
• The goods-and-services sentence. Every acknowledgment of $250 or more needs it. If the donor got a dinner, a gift or event tickets, it must describe them and give a value, not say "no goods or services."
• No value on noncash gifts. Describe the property. Don't let a draft add an estimated value for a donated car or a box of books.
• Names. Your organization's legal name, and the donor's name spelled the way they gave. Check joint gifts and gifts from a business or foundation.
• The date received and, for designated gifts, the fund or program, if you include them.
• No tax advice. A letter can say what the donor gave and what they got. It should not tell them what they can deduct beyond the required quid pro quo statement.

A practical checklist

• Use a standard template with your legal name and both versions of the goods-and-services sentence ready.
• Acknowledge every gift of $250 or more, by letter or email, and send any year-end summaries by January 31.
• Flag every payment over $75 that came with a benefit, and put the deductible-amount statement and value estimate on the invitation, the receipt, or both.
• Set a good-faith value for every event, premium and auction item before you sell it, and keep your notes.
• Use the current year's token-benefit limits. For 2026: $13.90, $69.50 and $139.
• For noncash gifts, describe the item and its condition. Don't state a value.
• Route Form 8283 requests to the person authorized to sign, and calendar the 3-year Form 8282 window for anything you signed.
• For vehicles claimed at over $500, issue Form 1098-C within 30 days.
• Never put a dollar value on volunteer time.
• Have a person review every AI-drafted letter against the gift record before it is sent.