Tax Letters

Jesse Calagna 2 · March 2018

I was wondering what the best practice is for sending tax letters to donors and the foundations that they gave through. I'm used to sending a thank you letter to the donor with no tax language and then a tax letter (or nothing at all) to the foundation. I know every place i have worked this policy changes, so i was just wondering if there was a standard practice.

thanks

Ryan Hyde · March 2018

We definitely don't send a tax letter to the donor (just a TY letter), and we typically send nothing to the foundation. Foundations don't need the tax letter really because they've got their own system of reporting, and there's a whole different set of laws surrounding that type of thing.

JoAnn Strommen · March 2018

Same essentially as Ryan posted. Most foundations in their paperwork with the gift will say they are not to be receipted. If it is from a personal foundation and we do not have any documentation stating not to receipt, that is my exception. I just run them a receipt. No big deal for me and then they have documentation if needed.

Susan Chomsky · March 2018

Jesse Calagna:

I was wondering what the best practice is for sending tax letters to donors and the foundations that they gave through. I'm used to sending a thank you letter to the donor with no tax language and then a tax letter (or nothing at all) to the foundation. I know every place i have worked this policy changes, so i was just wondering if there was a standard practice.

thanks

We send an acknowledgement to the donors (no tax language) and a tax letter to the Foundation. Sometimes there is additional reporting required and our Grants Manager will follow up. This way our donor (contacts) know how much we appreciate the grant and the foundation is aware we have received the distribution.

Steve Townsend · March 2018

We send thank you letters separately to tax receipts, so all donors will get a thank you letter but if the gift came through a foundation we don't send a receipt, unless it's a family foundaiton rather than a donor-advised fund, in which case we send a receipt to the donor in the name of the foundation.

Renee Grayson · March 2018

Jesse Calagna:

I was wondering what the best practice is for sending tax letters to donors and the foundations that they gave through. I'm used to sending a thank you letter to the donor with no tax language and then a tax letter (or nothing at all) to the foundation. I know every place i have worked this policy changes, so i was just wondering if there was a standard practice.

thanks

We do not include tax information as the foundations usually request that we do not. They request we send an "acknowledgement" letter that we received it and thanking them for the contribution. I usually cc the Foundation contact and send a photo copy of the letter to their attention. They then can see that we sent a letter and that it was appropriate, etc. and file in their donor's file.

Teresa Rice · March 2018

If you just want to be courteous and send them a "tally" at the end of the year (in addition to acknowledgment letters sent throughout the year), you can send them the predfined Annual Statement Report. There is no legal jargon on the report. It prints out the gift date, gift amount and fund donated to. Donors who made multiple donatioons throughout the year may apppreciate being able to see a list of donations at a glance. If you want, you can add a header or footer that says it's not a tax document, or for record keeping only.

Renee Grayson · March 2018

we use a specific letter code set up for these types of gifts to meet the needs of no tax info, etc. The donor's still need to receive an "thank you" from us when we receive a gift from their fund at a foundation.

Amy Smith · March 2018

Teresa Rice:

If you just want to be courteous and send them a "tally" at the end of the year (in addition to acknowledgment letters sent throughout the year), you can send them the predfined Annual Statement Report. There is no legal jargon on the report. It prints out the gift date, gift amount and fund donated to. Donors who made multiple donatioons throughout the year may apppreciate being able to see a list of donations at a glance. If you want, you can add a header or footer that says it's not a tax document, or for record keeping only.

This is our practice as well with our donors. They seem to like the annual statement.

Petra Hall · March 2018

Most organizations that facilitate third-party donations request we do not contact the original donor. We mark those gifts as "Do not receipt" and "Do not acknowledge" as well as setting the gift source to "Third-party Donor". Our tax and acknowledgment receipt runs rely heavily on queries that we use to exclude those gifts. We rarely contact the organization in this case, unless they request confirmation of donations received.

Jennifer Lange · March 2018

Jesse Calagna:

I was wondering what the best practice is for sending tax letters to donors and the foundations that they gave through. I'm used to sending a thank you letter to the donor with no tax language and then a tax letter (or nothing at all) to the foundation. I know every place i have worked this policy changes, so i was just wondering if there was a standard practice.

thanks

I follow Bill Connors' suggestion - I use a name on check attribute, so the person who makes the gift gets my standard ack letter, and the tax footer is adjusted to add "Name on Check: Foundation X." The Foundation gets nothing. They don't want anything. This helps me A LOT - one ack letter - and the tax footer changes based on that Gift Attribute automatically.

Jesse Calagna 2 · April 2018

Jennifer Lange:

Jesse Calagna:

I was wondering what the best practice is for sending tax letters to donors and the foundations that they gave through. I'm used to sending a thank you letter to the donor with no tax language and then a tax letter (or nothing at all) to the foundation. I know every place i have worked this policy changes, so i was just wondering if there was a standard practice.

thanks

I follow Bill Connors' suggestion - I use a name on check attribute, so the person who makes the gift gets my standard ack letter, and the tax footer is adjusted to add "Name on Check: Foundation X." The Foundation gets nothing. They don't want anything. This helps me A LOT - one ack letter - and the tax footer changes based on that Gift Attribute automatically.

what about in the case of a family fund? would you address the letter to the family fund c/o family or would you send it to the donors with language "thank you for you gift made through family fund"

Jen Claudy · April 2018

I prefer to use an Organization Record for the DAF/Foundation/Fund that is linked (with automatic soft credits) to both the family/Individual and the managing/administering foundation. This way, I can easily setup letters to use alternate text for the tax statement, etc. Looking at the administering foundation, you can see with SC what gifts have come in and the same looking at the Individual's record.

I also prefer to write the tax statements in such a way that if you do include the tax statement in a letter to a DAF, it doesn't really matter. Something like, "No goods or services were received in exchange for this donation. Please consult your tax professional on the deductibility of your charitable giving." Never anything like, "This gift is fully tax deductible!" because even for an individual, it may not be depending on other factors. Don't want anything in the receipt/ack letter to be construed as tax advice. I did have a boss that insisted on including, "This gift is tax deductible to the fullest extent of the law." but I never cared for that wording. Keep it as simple as possible, and if there are benefits with a value, state the value and not the potentially-deductible amount: "The fair market value of goods and services received is $XX. Please consult your tax professional...". (Of course, you can't normally provide benefits in exchange for a gift from a DAF.)

Tax Letters

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