Why You Need to Send Annual Giving Statements

Sending annual giving statements to your donors and funders is a fundraising best practice — and an amazing opportunity to show love to your donors.

An annual giving statement is also an opportunity to inform your donors about what makes your nonprofit unique.

Donors tell me that they look more favorably at nonprofits that provide gift statements. These documents signal that the nonprofit is thoughtful and organized — and it gives many donors timely and highly useful information as they prepare their income tax returns.

Here’s a sample gift statement that I like a lot. It comes from an organization I personally support, the Center for Action and Contemplation, a global nonprofit headquartered in Albuquerque, New Mexico. Notice how the report includes a link to the organization’s annual report — that’s a nice touch. More impressive is how it takes full advantage of the opportunity to practice its mission right off! CAC is consistent in all its messages about the energy it brings to its work. That inspires me!

Your donors often want to know the exact amount of their annual giving for tax purposes. It’s our job as fundraisers to provide a document your nonprofit can send to donors that details the exact amount they gave in the previous calendar year. The annual giving statement can be generated for each household, organization, or person who contributes to your organization.

The email and/or letter shows the donor’s cumulative giving for the previous year. Donors who give more than $1,000 should receive both an email and a hard copy sent by mail.

You can send the statement anytime between January 15 and April 15. The earlier in the year, the better.

And while these statements serve a practical purpose for donors as they prepare their taxes, you should think about them in the context of your annual fund engagement strategies.

Relationship, Record-keeping, Regulations

A gift statement provides a terrific opportunity to bolster your relationship and connection with your donors, thank them for their generosity, remind them what their giving helped to accomplish, express hope that the relationship will continue in the coming year, and show why their support is urgent.

Here we also see the critical importance of good donor data hygiene. Updating your donor data base, correcting addresses, and checking gift details allow your nonprofit to stay focused on accounting best practices. Further, putting it all on paper lets you and your donor mutually confirm that your records are in order.

A year-end gift receipt or statement ensures, without a doubt, that you’re in compliance with the IRS (or other government agency, for those nonprofits chartered in a country outside the United States). (You can read the official U.S. regulations in IRS Publication 526: Charitable Contributions.)

What’s Required?

Your document/receipt must include your organization’s name, the donor’s name, the date(s) of contribution(s), and the amount(s) of contribution(s).

I urge you to state the total amount of contribution(s) received for that calendar year if it was in more than one gift. Your donor often does not realize their cumulative giving, and when they see it, it makes them feel proud.

Also, you must include a statement explaining whether or not your organization provided any goods or services in exchange for these gifts. Say this: “No goods or services in whole or part were received in exchange for your gift.” 

Video Brings Higher Engagement

Recent studies show that video is a key to connecting with donors, especially amid the pandemic.

Making a short video, 90 seconds to two minutes, that presents the giving statement is recommended. Make it personal, upbeat, and inspiring.

The studies showed that video messages brought a whopping 43% increase in donor response.

Of Note

Many of the better donor databases have a giving statement automation, yet donor database providers tell me they are often not used! That’s a mistake. One donor database company, Classy, even produces a PDF statement of the donor’s giving that you could attach to a thoughtful email. You can even review the recipient list before sending the email.

Gifts-in-kind do not appear on the annual giving statement document. Acknowledge separately that you have received a gift, providing a description of the item and the date it was received. But let the donor estimate the value of the gift.

What’s your experience in sending annual giving statements, and what impact have they made? Please share below.

Also, please send this post to a colleague who may find it helpful.

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