Tax Donation Letter

A tax donation letter is one where you, as a representative of a non-profit charitable organisation registered with the government, write in to one of your donors, thanking them for their donation and mentioning the fact that due to their generous offerings, they will be made eligible for a certain percentage of tax deduction, and that the letter should serve as a receipt and confirmation of the donor's contribution to your organization when he approaches the income tax department with your letter.

The requirement for a tax donation letter

In case you are wondering the need for a tax donation letter, let us lay down the reasons for you-

• It serves as an incentive for donors to make contributions to your organization, and once you write a tax donation letter for them, it encourages them to keep making more donations.
• Ethics and decency. Charity should come from the heart, but lets also be a little practical here, in this miserable economic climate, it only makes sense that you see to it that your donor gets something in return for his/ her financial aid, to your foundation. Taking the time and effort to prepare a tax donation letter for your donor is a sign of common human decency on your part.
• Gratitude. Of course, nobody likes ungratefulness. Basic human traits like kindness and gratitude are often overlooked, so you should not make the mistake of doing so, as you should be the last person to be ungrateful, knowing fully well, how hard it can be to raise large amounts of funds in a weak economy! There is no bigger show of gratitude than a tax donation letter written by you.

Going about writing a tax donation letter

Think about writing a tax donation letter, the same as writing a “Thank You” note. The basic aim is to show your gratitude to your donor but also give back something in return, in this case a receipt in the form of a letter, making them eligible for a tax deduction.

Writing a tax donation letter is very simple. Begin with including the donor's name and address to the right hand side of the letter (in case of an email or letter interior). Follow it up with your own name, name of your organization, and your address.

Begin the letter formally, and keep the length as minimum as possible (no more than 200 words). The body should contain the following information on the contribution made by the donor, your gratitude for it, the fact that he will be eligible for a certain amount of tax deduction from the income tax department, based on the amount of his contribution (if you happen to know the percentage, include it), the fact that the letter will serve as a receipt, and proof of his contribution and info on any enclosed documents, if any (Example, The actual receipt of the donor's contribution).

End the letter with your name, followed by your signature, and finally your post in the charitable organization.

Tax Donation Letter Sample

Here is a sample of a tax donation letter, to help you get an idea of how to write one-

Robert A. Inman,
3806 Hidden Pond Road
Ashland City,TN 37015,
615-657-1268

Date: 21st February, 2012

William J. Harris,
The Valley Woods Children's Home,
1193 Hall Valley Drive,
Clarksburg, WV 26301,
304-620-7504

Respected Mr. Inman,

The Valley Woods Children's Home offers you our greatest thanks in return for your generous donation of $500, to the welfare of our children.

In hard economic times like these, we understand the significance and value of your kind contribution to our orphanage. It is the contributions from benevolent individuals like you, which keep our institution running.

As a token of our gratitude, please accept this letter as proof of your donation, and a “receipt coupon”, which should be submitted to the Income Tax Department. In return, you will receive a tax deduction of a percentage proportionate to your donation amount. Along with the letter, we are also enclosing the actual receipt for your payment, in case the Income Tax Department asks for it when you apply for your deduction.

Please contact us if you need further assistance. Thanking you once again.

Respectfully yours,
William J. Harris

[Signature]
President, The Valley Woods Children's Home

Writing a tax donation letter for your donor is simple, and makes a bond between the two of you sure to last for a lifetime. Also, you can review Tax Return Cover Letter and Letter To Request Correction On Your Taxes for sample letters.