Elvis Presley was known for saying to his audience, “Thank you. Thank you. Thank you very much”. This is one of his popular phrases. Elvis may have been on to something. Thanking people makes them feel important, and people react positively to the phrase “thank you”.

Donors react positively to the phrase “thank you.”

Your organization should say this often.

You will experience soaring fundraising results when you deliver timely and sincere acknowledgements of gift and cash donations. Supporters who graciously give are aware of the IRS governing donations and know they must provide documentation relating to contributions.

The IRS Publication 1771 sets forth the rules for providing written documentation in order to claim a deduction.

Keep in mind these IRS contributions requirements when you write your Thank You. Know a little about your donor and what she expects to accomplish with her contribution. Your Thank You should be sincere and relate to your donor in a personal way. If the donor wants funds to go toward a children’s playground, acknowledge the gift with a Thank You that includes plans for a playground, or include a photo of the completed playground--with children playing. If your giver wants to fund a new kennel area for an animal rescue project, invite her to visit the shelter, or send photos of dogs benefiting from “her” new kennel. Personalize the Thank you.

Thoughtfulness and thankfulness go hand-in-hand.

Show your gratitude as soon as possible after receiving the gift. You might send an initial Thank You when receiving the gift; and if the donor ear-marked it for a city beautification project, send an additional Thank You when the flowers get planted. Keep the patron updated on how you are using their donation. Thoughtful acts cement your relationship with donors and indirectly invite them to be an ongoing supporter.

Prepare a documented substantiation statement for the donor when their personal tax filings are due. This communication can be delivered by regular mail or email. The benefactor uses this record as validation for their gift. It is not the job of a not-for-profit to place a value on items donated--that is the responsibility of the giver.

To receive a tax deduction, the donor needs to supply the IRS with a bank record or a written communication from your organization stating the gift was a charitable contribution. A receipt alone is not enough. The IRS expects a written gift acknowledgment for contributions over $250.

Gifts less than $250 do not require a written acknowledgment unless the gifter obtains something of value in return. For details on such situations, refer to IRS Publication 1771.

Keeping records is essential.

The IRS has rules for the content of a gift acknowledgment. Be sure to include the following in your documentation

• Date of the donation.

• Statement that your organization is a public not-for-profit under IRS Section 501(c)(3).

• Total of the amount contributed if cash or cash equivalent.

• Description of property value for donated real property; value determined by donor.

• Statement that your organization did not receive services or goods in exchange for the offering.

• For such items as basketball playoff tickets or meals at an event, your organization needs to give a fair-value estimate for these items.

Some sponsors prefer to grant funds to your organization through a Donor Advised Fund (DAF) such as T. Rowe Price Charitable or Fidelity Charitable, a DAF at a community foundation, or a DAF that receives online donations such as PayPal Giving Fund. A donor advised fund is a charitable investment account, for the sole purpose of supporting charitable organizations your giver cares about. Your benefactor furnishes cash, securities and other assets to a donor advised fund. When this happens, the giver can usually immediately take a tax deduction. Then DAF invests these assets for tax-free growth and can propose grants to any IRS Section 501(c)(3) organization. DAFs are growing in popularity because it is easy for the contributor to give to your cause, and these grants have great tax benefits.

When your organization receives a donation from one of these operations, you receive a notification stating the donor’s name and contact phone or email address, along with the details regarding the grant. You need to recognize this gift by sending a communication thanking the donor for the gift. The very fact that the grant came from a DAF indicates that it is a tax-deductible charity grant.

A great idea...

When showing appreciation for a grant, include the amount of the grant in the communication.

State the date you received the grant and include the name of the DAF from which the money came. Sometimes you do not know the name of contributors because they wish to remain anonymous.

Keeping records is essential. You should know who, what, when and how much your organization received as donations or pledges. If benefactors have questions about their donations, point them to the IRS Publication 1771. You can provide the website for IRS.Gov--or better yet, sit down with the patron and discuss this publication with him.

Thoughtfulness and thankfulness go hand-in-hand. Show appreciation to givers and they will continue to give. Let them know how much you value their giving. Be sure to say, “Thank you. Thank you. Thank you very much.”

To participate in a discusion with other Non-Profit Executives, visit The Non-Profit Accounting Spot where you can talk about all things not-for-profit. To find other articles, check out our blog at TBFosterAccoutning.com.