Upon accepting a donation, a nonprofit organization must give the donor a receipt. Until late 2006, only large-ticket donations necessitated a receipt for a taxpayer to claim it as a deduction, but it is presently the case that each and every donation, even small ones, must be proven by receipts. An acceptable receipt clearly lists the amount given or what was given, the full name and address of the nonprofit, and the fact that it is a charitable organization. The nonprofit organization should keep its own records logging each donation along with the name and address of the donor.
All money that is received by a nonprofit must be logged and recorded so as to correctly report on the Form 990 filing. Even very small donations must be tallied individually. While the Salvation Army may not give a receipt for each nickel that they receive in their emblematic red kettles, they do make sure to tally the receipts for each location and each day throughout the donor season.
Donations of items other than cash money are called “in-kind” donations. They may be directly useful as in the case of office equipment, or be useful as a sale or donation-enhancing item. NPOs must to keep records of this kind of donation, as well. Items worth more than $500 must be given a professional appraisal so as to avoid over- or under-reporting contributions.
NPOs that have a process by which to thank donors in place have an increased likelihood of securing future donations. Thank-you letters and gifts, as well as invitations to membership can be ways of recognizing donor contributions and ensuring future goodwill.
