Donations and charitable work can be remarkably rewarding. These activities also come with a bit of paperwork, considering that charitable contributions are tax-deductible. For this reason, it's vital to familiarize yourself with how to create professional donation invoices. Each donation incorporates unique details, necessitating customization.
For nonprofit organizations and charitable organizations, presenting donors with detailed invoices is one way to demonstrate gratitude and encourage repeat donations. Most donors expect organizations to acknowledge the receipt of donations. By sending an invoice, it becomes easier to deepen relationships with donors. Thankfully, Skynova's invoice template allows you to indicate the donation amount, donor's name, and other essential details.
In this article, learn key features of Skynova's invoice template and how to fill one out.
What Is a Donation Invoice?
Donation invoices (also known as donation receipts) provide proof of a charitable donation. Information covered by these types of invoices includes:
- The date of the contribution
- The donor's name
- A description of the donation
- Contact information, such as a phone number
- The name of the organization
These receipts enable donors to claim tax deductions on contributions of $250 or more. Although many nonprofit organizations issue receipts, some acknowledge donations via email, a card, or a letter. If these correspondences indicate key information about the contribution, they can also act as receipts.
Companies typically record cash donations by creating a vendor account for charitable organizations. Once the account is active, the company lists the donation as an expense. The related invoice falls under a dedicated expense account, which records tax-deductible contributions. Information from the account also appears on the company's income statement.
Invoices eliminate any uncertainty that your organization didn't receive or process donor gifts. Your donors can feel satisfied that their contributions are making a difference. In turn, you can foster long-term stewardship. A donation receipt provides an opportunity to thank individuals and companies with personalized messages, deepening the bond between your charitable organization and donors.
Many prominent charities understand the role played by donation receipts in bolstering the donor stewardship plan. You can leverage invoices in tandem with ongoing stewardship activities. Over time, you'll notice a marked growth in your nonprofit's donor retention rate.
Thoughtful and timely donation acknowledgments are vital to the success of your fundraising strategy.
When Are Donation Invoices Used?
Claiming a tax deduction when filing returns at the end of the year is the main reason donors need a donation invoice. This type of paperwork is mandatory for gifts worth $250 or more; otherwise, the Internal Revenue Service (IRS) won't approve the donor's tax deduction claim.
You can also issue invoices when donors make in-kind donations. As such, the receipt may not include a monetary value but a detailed description of the services or goods contributed. It's also possible to assign a monetary value to the contribution based on the estimated value of the included items.
As a nonprofit organization, if you provide some benefits to donors in the form of goods or services, the contribution becomes a charitable donation. The donation invoice should incorporate a breakdown of the benefits and the donation amount.
Examples of member benefits include admission to paid charity events, T-shirts, and reduced membership fees. Many charitable organizations offer a wide selection of goods and services in exchange for donations.
Free Donation Invoice Template
Skynova's invoice template allows you to create donation receipts capable of accommodating essential information. This template comes with several standard and customizable features.
Some key donation receipt template features include:
- Ability to download the free invoice template as a PDF
- Unique invoice number
- Manage multiple invoices
- Invoice search function
- Automatic tagging and sorting
- Description box (suitable for donated goods and services)
When filling out the template, you should indicate the donation date, your nonprofit organization's name, and the donation amount. If your donors contribute goods or services, provide information about the donated items in the description section of the Skynova invoice template.
For instance, if a company contributes air conditioning (AC) systems and provides installation services, you need to list the number of AC units and the scope of the installation services. Provide a good faith estimate value of the AC system and the installation services for tax purposes.
Once you include the donation amount or list of the donated goods and services, add a statement confirming that the donor didn't receive any benefits in exchange for the fundraising donation (if that's the case). In the event that the donor received benefits, provide a breakdown of the contribution and the benefits your nonprofit organization provided.
Strive to add detailed information on the invoices for your donors' convenience. Doing so demonstrates your nonprofit's gratitude. Details like your organization's physical mailing address should appear on the receipts.
You should also ensure you indicate the right dates on the receipts. For instance, if a supporter sends a contribution by mail in mid-December and it reaches your desk in January, report the correct date on the invoice.
Another way to deepen donor relationships is to keep up to date with state rules regarding donation receipts. Rules change over time; keep checking with the relevant bodies where you live. In turn, your sponsors will receive receipts that comply with current laws and regulations.
Lastly, indicate the donor's employer identification number (EIN) or Social Security number (SSN) for tax purposes. The EIN is vital when filling the tax return IRS form.
How to Create a Custom Donation Invoice
Skynova's invoice template allows you to customize entries to suit your specific needs. It eliminates the need to work with cumbersome documents. The template offers three essential donation invoice customization options: Add a purchase order number, your company's logo, and sales tax.
Add Your Company Logo
Adding a logo to the donation receipt creates a professional look, demonstrating that the receipt is a business document containing important information. The best part is that Skynova's free invoice template simplifies this vital customization option.
To add your business's logo, simply click "Show Customization Options" and select "Logo." You can then browse your image files and upload the logo to the header section of the invoice. In doing so, you add a custom touch to the document and enhance your company's reputation.
Purchase Order Number
Under the same customization options, you'll find a "P.O. #" option that, when selected, adds a purchase order number line item below the invoice number box. The P.O. number refers to a legal document that provides comprehensive details about a transaction. Some details included in the document include goods or services involved in the transaction, the delivery date, and other relevant information.
A P.O. number helps identify and track recurring transactions. The number makes it easier to link specific donations with transactions, helping your organization maintain up-to-date records. Once two parties agree on the terms of a purchasing order, the document becomes legally binding.
Skynova's invoice template also adds a line item for tax next to the "Unit Price" and "Quantity" sections when you click on the "Sales Tax" customization option. The template also enables you to show a tax column, which indicates whether sales tax applies to the line item.
Donation Invoicing Is Easy With Skynova
Skynova's invoice template simplifies your work with intuitive donation receipts. Count on our customizable templates to accommodate critical information so it is easier for you to keep accurate donation records. The IRS expects donors to submit proper donation invoices when filing income tax returns.
Relying on basic tools isn't the most practical way to generate professional donation receipts. The best part is that you can customize various line items, such as purchase orders and sales tax. In addition, our template comes with a company logo upload feature to create a more professional document.
By using our template, you can focus on core activities like fundraising, meeting with board members, and collaborating with volunteers. To learn more about creating a custom donation receipt, check out Skynova's free invoice template today.
Notice to the Reader
This article provides general guidelines. For expert advice, consult a professional accountant who can help you adhere to standard accounting practices.