How to Make an Awesome (or Terrible) End of Year Donation Receipt
As the end of the year approaches, holiday music fills the air, there's lines for santa at the mall, and for those involved with receiving donations at a church or non-profit, the dread of having to send out end of year donation receipts sets in.
Rather than seeing this as a necessary evil hovering over January, we think that end of year tax statements can not only be easy to create but also incredibly strategic for your church. In order to do this, we think there's four key principles to keep in mind:
- Trust: Does your end of year giving statement communicate professionalism and create a sense in donors that their money is being put to good use in wise ways?
- Brand: Is your end of year tax statement's appearance consistent with the rest of your church?
- Gratitude: Are you thanking your donors or merely informing them as to what they've given?
- Vision: Are you inspiring people by sharing the bigger story/dream/goal which their donations are helping to achieve?
To show these principles in action, we've put together two examples of end of year giving statements - one showing what not to do and the other showing a great example you could follow.
What Not To Do
While technically this tax statement is legal, it really drops the ball when it comes to the four principles in question.
- Trust: When people see mistakes or poor formatting on a tax statement, it's easy for them to assume that these same characteristics are true of the rest of your church. The key errors in this example include:
- Multiple misspellings
- Lack of detail - rather than showing each individual contribution or the total given to each fund, the statement simply lists the total, leaving the recipient to hope that it includes all of their contributions.
- No change in font size, making it hard to tell what to focus on. While this letter is fairly short making this not as big of an issue, poor font size and lack of spacing in longer letters can make for a really poor reading experience.
Everyone wants their donations to be used wisely. Don't let your giving statements be an opportunity for someone to question if your organization is really the best place for their gifts.
- Brand: This example, other than listing the name of the church, includes no branding information: no logo, colors, or other design elements that immediately point to who the statement is from. As humans we develop loyalty and trust towards certain brands. This statement gives up an opportunity to help increase that brand loyalty towards your church.
- Gratitude: This giving statement fails to express gratitude in any significant way. The brief thank you statement feels more like an obligation than heartfelt appreciation. While it's true that it's a legal document used for tax purposes, it's still being read by people who have given their hard earned money to your organization. Research shows that people who are not thanked for an activity have a significantly decreased chance of repeating that activity. Following this logic then, this statement runs the risk of decreasing the amount a donor will give in the future.
- Vision: This example giving statement doesn't share anything about the dream, goal, or bigger story that the gifts are helping to achieve. And people need to be reminded of that vision because without constant reminders, we forget how important this thing we call 'church' is. Consider Bill Hybel's words from his book Axiom: Powerful Leadership Proverbs:
Some leaders believe that if they fill people’s vision buckets all the way to the top one time, those buckets will stay full forever. But the truth is, people’s buckets have holes of varying sizes in their bottoms. As a result, vision leaks out ... When you can tell it’s time for a vision refill, use every communication means available to you to repaint the picture of the future that fills everybody with passion. And then take it a step further by reporting progress on the vision’s achievement. Trust me, when you wrap a little real-life proof around the accomplishment of your church’s vision and show that the dream really is coming true, the fog will start to clear and people’s heads will start to nod. “Oh yeah!” they’ll suddenly remember. “I get it! I get it! This is what we’re about! This is why we exist as a church.”
Reminding people of the vision within your end of year giving statements can be a great way to help "refill the buckets". Think about it - the recipients of the letters have to read it. They need it for filing their taxes. Why not take advantage of that fact by reminding them of the wonderful things their donations are helping to achieve.
What To Do
This statement is not only up to the legal requirements, it also can help to create excited and involved donors who are engaged in your church's community. Here's why we say that:
- Trust: This tax statement is spell-checked, formatted cleanly with large text designating new sections and blank space helping viewers easily identify the information they are looking for. It creates a sense of trust and professionalism that can help donors assume that their gifts are being put to good use. Additionally it shows each individual gift the donor gave, giving them confidence that their contributions were received and the total giving amount is correct.
- Brand: Not only is the church name included but their logo is used and their contact information is presented in a stylish way. This is the same logo and formatting recipients would see on any other publication from the church. This all works together to create a sense of brand loyalty in donors. This sense of brand loyalty is everywhere we look: Apple places their bitten-apple logo on sleek-looking products and Coca-Cola places their logo prominently on their cans. It all helps to create a sense of brand loyalty, in these cases, fanatic Apple fans and die-hard Coke drinkers. This tax receipt takes advantage of these same dynamics by intentionally branding the statement in an attractive way that's consistent with the rest of the church's material.
- Gratitude: This giving statement clearly expresses gratitude, thanking the donor for their valuable gifts. This gratitude is made even more powerful by the letter being from the pastor of the church (with their name and signature at the bottom) rather than a generic "from the church" signature. And as the research article referenced above indicates, genuinely thanking people for their gifts also creates people who are more likely to give again in the future.
- Vision: This giving statement does a great job at communicating how donors' gifts are helping to achieve the big dream and vision for the church, both in abstract and concrete ways. It reminds people of the mission of the church (abstract), shares some accomplishments that the donor's gifts have helped bring about (concrete), and points towards doing this in the future. This in turn creates people who are excited about what their church is doing, people who want to be involved in what's happening, and people who fall in love with being part of something bigger than themselves.
If you'd like to use a modified version of this statement for your own use, a similar version is available within Breeze as one of the contribution statement templates you can choose from (more information on statement templates here).
While things like professionalism, brand, gratitude, and vision are exciting to talk about, it's also important that you comply with legal requirements. While we're not lawyers (and this is not official legal advice), here's a quick checklist that would be worth going through. (Note that this is tailored to churches and non-profits in the United States; Canadian churches may want to look at this and churches in other countries will want to consult their local requirements).
- The name of your church
- The amount given (for monetary donations)
- A statement that no goods or services were provided by the organization in return for the contribution, if that was the
The following requirements are less-frequently relevant but important nonetheless:
- Description (but not the value) of non-cash contribution
- Description and good faith estimate of the value of goods or services, if any, that an organization provided in return for the contribution
- Statement that goods or services, if any, that an organization provided in return for the contribution consisted entirely of intangible religious benefits, if that was the case