January 14, 2019

Hey Nonprofits, It's OK to Say Thank You!

Ann Casey

Year-end giving makes December a busy month at Madison Community Foundation. It’s a time when we receive charitable donations from a variety of individuals and organizations and send out dozens, if not hundreds, of donor advised grant distributions. I pondered the various ways nonprofit organizations receive support from their donors—through MCF as well as other charitable giving tools and entities. And I thought about how confusing those gifts can be and how nonprofits may need to adjust their systems to deal with them.

Grant distributions from donor advised funds come from the fund “sponsor” (e.g. a charitable organization like Madison Community Foundation). The individual donors took a tax deduction when making the contribution to the fund, so they don’t get another deduction when they advise a distribution to a nonprofit. Materials sent out with the check may remind you, the nonprofit, not to send a tax receipt to the individual donor. But, it’s ok to say thank you! Please, don’t hesitate to acknowledge and thank donors, letting them know that you received the contribution from their donor advised fund.

Increasingly, donors age 70 ½ are making Qualified Charitable Distributions from their IRAs. The check comes from a financial institution and may (hopefully!) reference “QCD” or “RMD” (Required Minimum Distribution) and the donor’s name. The contribution is definitely coming from the individual donor, not the financial institution, so be sure to recognize the donor. The donor cannot take a tax deduction for the QCD, but … it’s ok to say thank you!

We are also seeing some contributions coming from third-party sources like bank bill pay services. In that case the nonprofit receives a check from a financial institution, referencing (hopefully!) the donor’s name. This should be treated the same as a personal check from the donor, and the donor should get the tax receipt … and a thank you!

Other times a nonprofit may receive money from an employer matching program, sometimes via a service provider like Benevity. In that case the contribution is coming from the employer, so that is who should receive the tax receipt (though sometimes the entity will say they don’t require a receipt). But it may have been preceded by a contribution from the employee and some paperwork—or online request—to verify that employee contribution. Be sure to keep track of and respond to those matching requests, so the match can be processed as soon as possible. And … it’s ok to say thank you! Do let the employee know that you received the contribution and thank them for recommending the match.

There are other programs out there where customers of a business may be able to direct a rebate or other funds to charity. Often those programs require some sort of registration on the part of the nonprofit, so (hopefully!) you have heard about it before the funds arrive. Again, the contribution is actually coming from the company, not the individual customer, so that is who would receive the tax receipt. But … it’s ok to say thank you! If you can determine who directed the contribution (though sometimes that isn’t possible), be sure to let them know you received it.

I could go on, but you get the picture. Nonprofits receive support in a variety of different ways, and that’s a good thing! Many contributions come with letters and explanations for the source of the gift. These need to be read and understood. No longer can you just send a form letter tax receipt to the address on a contribution check. Even if the individual who advised/directed/recommended the contribution shouldn’t get a tax receipt, it is important to thank them.

Recently a financial planner told me about his client who sent “test” contributions to a list of charitable organizations. Those who thanked her were included in her will; the others were not. You never know where your next major gift or bequest will come from.

So remember, it’s ok to say thank you!