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Tax Receipts on Demand

One thing is clear in the non-profit world - there is a lot of confusion regarding what is required and not required. For example, when are tax receipts required? We discuss that and more this week for #ThursdayThoughts

On Demand Tax Receipts

In the past, GSH has always automatically created tax receipts for donors who had donated over $250 total in the previous year. In 2017, we changed our accounting software and started working with more accountants, who helped clarify the laws a bit. As it turns out, legally keeping track of your donations are the responsibility of the donor. Also, any single donation of $250 or more must have written acknowledgement from the non-profit, but the responsibility to ask for that acknowledgment lies with the donor. In other words, receipts are "on demand" and only actually required for donations larger than $250.

So, we changed our way of doing things. We've implemented an immediate mailed thank you process to acknowledge the donation - and to express our real thanks - and posted throughout December and January ways for donors to contact us for receipts. No one did. Then, in early February, we received several requests in a row. Which we immediately processed and sent - the new software actually makes it pretty easy.

But what did we actually run into? Lots of misconceptions. As it turns out, the law doesn't necessarily match people's perceptions, but of course, that's nothing new. There is a common belief that a non-profit must provide a written receipt for every single donation. Even non-profits themselves will put out bad information - for example, our stance of "we will send receipts for donations totalling over $250 in a year" was inaccurate. But one can easily see how various receipt policies from non-profits could be taken as "law".

So what did we learn? I'm not a fan of "tax receipts on demand." I've stressed all January why certain donors weren't asking for a receipt, and even with the thank you cards, don't want anyone to feel they aren't being acknowledged. Even though it's rare that a donor contributes enough to actually be tax-deductible, if a donor can deduct, we want them to. We want donors to have good experiences with us and feel that they are appreciated (because they are!) and cared for.

So, this process has me revisiting how we do receipts, while at the same time inspires me to continue to discuss the actual legal requirements of a non-profit and combat the various myths that exist, while still acknowledging that good practices may not be as simple as the legal requirements.

Going forward, I am going to explore having our software just send the receipt automatically via email (printed and mailed for mailed in donations) when the books are reconciled. We'll still offer summary receipts every January "on demand" if desired. While legally, the requirement is only to provide receipts on demand, I think for my own stress levels and just for good, transparent practices, this is the best route.

If you are still in need of a receipt for your 2017 donations, please let me know, and I'll send one over right away.