Legal issues

Understand tax deductibility.

Many donations to charity are tax deductible, but not all are. In order to do so you must be a 501 c 3 or have the right to use another group’s 501 c 3 to process your donations.

Provide acknowledgment letters.

Acknowledgement letters are important for a few reasons. They are the right thing to do, of course, but they also provide the donor with a record of their donation for tax purposes. The IRS requires that an acknowledgement letter be provided for any gift of $250 or more. Acknowledgements must be written, but can be electronic or printed. Although the threshold is $250, it’s good practice to acknowledge every gift you receive, even if it’s $5.

Talk to a professional.

The best way to understand the legal issues in fundraising is to get professional advice. Check with your financial staff, an attorney or an accountant who specializes in nonprofit finance if you have any questions at all about the law.