Handling Contributions

Accurately tracking and managing contributions is a must for any nonprofit organization. Charitable contribution deduction rules changed with the passing of the Pension Protection Act in 2006.

Handling Contributions

Before then, you could use your check registers or personal notations as documentation.

Now all donations must have proof of the deductions.

As stated above that proof may be either a bank record or a donation receipt.

A bank record for this record-keeping requirement include bank or credit union statements, canceled checks, or credit card statements.

They must show the date paid or posted, the name of the charity, and the amount of the payment.

A donor cannot claim a tax deduction for any single contribution of $250 or more unless the donor obtains a contemporaneous, written acknowledgment of the contribution from the recipient organization. (IRS Publication 1771)

Contemporaneous means "existing or occurring in the same period of time". According to Pub 1771, for the written acknowledgment to be considered "contemporaneous with the contribution, a donor must receive the acknowledgment by the earlier of:

  • „the date on which the donor actually files his or her individual federal income tax return for the year of the contribution; or
  • „the due date (including extensions) of the return.

Written Acknowledgments for Contributions:

According to the IRS Pub 1771:

The donor is responsible for obtaining a written acknowledgment from a charity for any single contribution of $250 or more before the donor can claim a charitable contribution on his/her federal income tax return.

However, the IRS does require you as a charity organization to provide a written disclosure to a donor who receives goods or services in exchange for a single payment in excess of $75. Click on the above link to download the complete IRS publication on this matter.

So it is up to your church policy if you send out contribution statements or make them readily available for anyone who requests one.

Requirements for a Contribution Receipt:

contribution receipt rules

The receipt must include the Church's or Nonprofit's name, the donor's name, the date(s) of the donation(s), and the amount(s).

It must also contain a statement explaining whether the charity provided any goods or services to the donor for the donation. If no goods or services were provided, you would include wording such as:

"You did not receive any goods or services in connection with these contributions other than intangible religious benefits".

An annual contribution statement will satisfy this requirement for churches.

You should send your donors a receipt no later than the due date of their tax returns.

However, if you are issuing receipts on an annual basis, you should try and get them to your donors by at least January 31st each year and earlier in January if possible. This will assist your donors in gathering necessary data for their tax preparations.


Your donation receipts or acknowledgments can be issued gift-by-gift, monthly, quarterly, annually, or any other frequency. This is up to your organization. If you have a policy and procedure manual, the frequency should be recorded there.


There is no specific design of the receipt required...EXCEPT for form 1098-C, used for gifts of autos, boats, or airplanes.

The receipt can be a letter, postcard, or a computer-generated form. It does not have to include the donor’s social security number or other taxpayer identification number...but it must include the required information listed above.

A receipt can also be provided electronically, such as via an email addressed to the donor.

Report and Value:

A written receipt should be issued for all non-cash donations. Usually, your organization is not responsible for establishing the value of the non-cash items and should not include any value on the receipt.

Click here for an example of a noncash donation receipt.

However, a new tax law adopted in 2004 requires extra documentation from your organization for donations of qualified vehicles (including automobiles, boats, and airplanes.

For detailed instructions...look on the IRS website or purchase my book: Church Contributions in the Church Accounting Package.


Usually, gifts by church members to pastors, specific needy individuals, and specific church employees do not qualify for a charitable contribution deduction and should not be included on the donor's annual contribution statement.

See this page for more love offering guidelines.

How to set up and administer a Benevolence Fund

Donated Labor and Service Contribution:

See more on setting up and properly administering a Benevolence Fund in the Church Accounting How To Guide


  • requirements for payments
  • discretionary benevolence funds
  • benevolence for employees
  • disbursement procedures
  • written benevolence policy example and much more

The IRS does not permit a tax deduction for donated labor or services. However, a donation receipt may be issued for donated materials and other out-of-pocket expenses.

Say...a repairman voluntarily came and fixed your church's air conditioner. He usually charges $75 per hour for his labor and he spent $50 for parts.

You can issue him a receipt for the parts; however, his labor is a generous non-deductible gift to the church. Also, he can deduct his mileage to the church and back if he itemizes on his personal taxes.

Un-reimbursed expenses that volunteers incur while performing their volunteer services can generally be deducted from their personal tax return.

Important note: If their volunteer’s expenses exceed $250, they should receive a letter from your organization indicating the type of services they provided. The letter should not include the value of the volunteer's expenses. The burden is upon the volunteer to prove their expenses.

In summary, keeping accurate records of contributions is imperative for your organization as they are the life blood of your organization.

Whether you use donation tracking software, spreadsheets, or paper...understanding when to issue receipts and when not to, is knowledge every finance person in your church should have.

The book: Charitable Contributions will take you step-by-step through the strict guidelines for donations of automobiles, boats, and planes...and what you must give your donors for donations of property over $500.

Do you know the the IRS mandates for contributions collected at church events such as: bazaars, banquets, actions, etc? See more details.

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Contributions Questions and Comments

Do you have a question or comment regarding contributions? Share it!

Contribution Q&A

The following comments, tips, and Q/A were provided by FreeChurchAccounting's generous readers:

Requested refund of a contribution 
Can I put a disclaimer on contributions that they can not be refunded?

required backup paperwork Contributions 
Are churches still required to maintain paper or digital records of contributions? i.e. copies of checks, OR do the records of church and annual statements …

Wedding use of building -- donation 
Can we give a contribution receipt to a family that made a monetary donation to the church that used the building for a wedding? They are not members …

Last year's Contributions 
Can I add January 2021 contributions to 2020 contribution report?

Should all types of giving be recorded on the end of year contribution statement. 
My church accepts Tithes and Offering 3 different ways. In person giving during service, through Givelify an online giving site, and through cash app. …

How to record donations by check 
How should a nonprofit record donations by check, specifically when it is from a joint bank account? Should they be recorded as being from the person who …

Can a church give a contribution receipt for a website name that is donated? 
There is a website name that the church would like to buy (the church initials.com), but it is for sale for $45,000. If the church paid $100, could we …

IRS Disallows Charitable Contributions 
Hi, a member of our church is being audited by the IRS. The member gave the IRS the annual contribution statement that I provided to him. The statement …

Timing of donation vs the donation receipt 
Can I issue a donation receipt for a donation of non-cash items in 2019 when the donation will not be received until 2020?

Retired pastor receives gift from church. 
Church donates a home to retiring pastor, what are the tax consequences to him?

Refunding a restricted donation 
Does anyone have a sample of a letter to go along with a refund of a restricted donation that was requested by the donor?

Proper reporting on online giving fees. 
If someone gives online $100 and the church is assessed a $ $2 fee, how should that be recorded? Should revenue be credited for $100, Cash debited for …

Waiving Tuition in Exchange for Professional Services  
We are a non profit organization 501 c3, religious, catholic private school who receives tuition fees from the enrolled students. We have a parent …

how to receipt a land donation 
Our church was donated land and the donor wants a receipt for tax deduction. Is this legal and if so what must the receipt contain?

Donation to Men's Breakfast 
Are contributions to a men's breakfast to off-set the costs deductible and should they be included on statements? To give some background: the men …

How would you treat QCD contributions to General Fund 
How would you treat and report QCD (Qualified Charitable Distribution) that go to the general fund. In our contribution tracking software the general …

Hard copies and/or eletronic copies 
In the age of electronic accounting software, is it necessary to keep hard copies of donors' contributions? Once the contribution including applicable …

Is a year-end contribution receipt necessary if the donor was another non-profit organization? 
Is a year-end contribution receipt necessary if the donor was another non-profit organization?

Recent IRS Ruling on Contribution Receipts 
Twice within the past few months after making an online charitable donation, I received a statement that no goods or services were received for my contribution. …

Can I deduct receipts for purchasing items requested by church 
Our church is collecting items to fill shoeboxes for Operation Christmas Child. can I deduct these expenses using my receipts for items I purchased or …

Expenses Paid for by Parishioner with Receipt 
I occasionally have a parishioner turn in a receipt for items they have purchased as a giving item. How do I treat these as far as giving records? Strictly …

Congregants leaving property and/or money to the church 
I have had a few congregants tell me that they want or are leaving some kind of property to the church when they pass away. They put this in their will/trust. …

Charitable donations using PayPal 
If someone donates to a charitable organization using PayPal, as long as the PayPal receipt includes all the required information, does that suffice as …

Business Sponsorship Tax Deductible? 
Our church is holding a concert and wants to ask businesses to sponsor the concert. Would the business' contribution be tax deductible? For example if …

Click here to write your own.

Free Will Donation 
We have a dinner fundraiser where the attendees are asked to make a free will donation to the youth program (specifically their summer mission programs). …

Support from other churches/denomination 
As a recent church plant, we are receiving support from sister churches and from our denomination's church planting committee. How should these be accounted …

Deductions for Church Mission Trips 
A group from my congregation recently went to Kenya to help at a school. Each person was expected to pay $3000 for the trip. In return they received plane …

Contributions on behalf of a third party 
Situation: Contributor A writes contribution (tithe) check to church for stated amount. On Memo Line Contributor A writes "to be credited to Contributor …

Is it required to mail contribution statements to donors or is it up to the donor to request the statement? 
Is it required to mail contribution statements to donors or is it up to the donor to request the statement?

Can I split a tithe check across multiple months in QB? 
Our largest donor recently submitted a single tithe check for the months of December, January and February combined. (He noted that on the check since …

E-Giving and a W-9 
We are not 501c3. Should we have to provide a W-9 to the company processing the online receipts of Tithes and Offering. We do not file income taxes

EFT online giving 
Another way to give "online" is to do an EFT (electronic fund transfer) from your bank to the church account. Most banks do not charge for online transfers …

Online Giving 
GivingRocket.com has done significant research in the area of online giving, and they offer a ton of helps for increasing funds for ministry. They recommend …

Clover is simple, inexpensive and extremely well-done. 
Our church plant decided to use Clover for our church website and now for our online giving. They are less expensive than EVERYONE else we looked at and …

My church, Fort Caroline Baptist Church (www.FCBCJAX.COM)in Jacksonville, FL uses a company named (NCS Envelope Service)and the website (e-giving.org). …

Experience with Vanco Services 
Our Church has been using Vanco Services for 3 or 4 years and have found their services to be excellent and not expensive. Scheduled and one time …

Recordkeeping: Copies of Tithing Checks  
What are the rules with keeping copies of tithing checks? Should we keep copies and keep with our deposit accounting records and if so for how many years? …

Click here to write your own.

See more comments, tips, and Q/A from FreeChurchAccounting Readers!

The comments above are for general information purposes only and do not constitute legal or other professional advice on any subject matter. See full disclaimer.