Getting Ready for Tax Receipt Season
Now that Giving Tuesday is behind us. All that's left is the final push of end-of-year asks. But wait, for data folks, the next big wave is tax receipt season.
Each organization decides what they should or should not receipt based on CRA guidelines. The IRS also provides similar written acknowledgment guidelines. So much so that some organizations do not even issue tax receipts. I know it's mind-blowing. That's a topic for another day. CRA does provide a comprehensive list of all tax receipting requirements.
Below are a few helpful tips to help ease your workload. If you start working on these tasks now you have plenty of time before the Feb 28, 2024 deadline. Start pulling your data and cleaning up or coding your data accordingly.
TIPS TO HELP STREAMLINE TAX RECEIPT DATA PULLS
Issuing a receipt – ensure the correct individuals and organizations are coded in your database to receive a receipt. In Canada or the United States, some organizations do not qualify for a tax receipt, e.g., other charities or community organizations. Check the links above to confirm who qualifies.
Names – make sure your database lists the names of your donors correctly. Donors may not always remember what your organization writes in a letter, but they will remember if you did not get their name right. I would even dare to say getting a donor's name correct on their tax receipt is an act of stewardship. Should the spouse be listed or not listed? Be clear on your organization's policy on this issue. Titles are not required, so exclude titles for tax receipting naming conventions unless absolutely necessary.
Addresses – if your organization subscribes to a National Change of Address (NCOA), please ensure you run your list. Getting donor addresses up to date is important. If you mail your tax receipts, this is a critical step. A donor's address is a requirement when issuing a tax receipt. If no address appears on the record, do not issue a tax receipt. Be sure to make this change within our system. When a new address is provided, be sure to remove any codes that prevent tax receipts from being issued.
Email – if you send your donations via email, ensure your email information is up to date. If you are using an emailing tool such as Blackbaud's NXT, Constant Contact, or Mailchimp, be sure that your communication preferences are up to date. Some emailing tools have very binary options so if the individual has unsubscribed to a piece of communication, you may not be able to send your tax receipt via email. Check your settings.
Totals – one thing donors notice more than your organization misspelling their names is if the receipt amount is incorrect. Monthly donors or capital campaign donors, check for any missed payments.
Consolidated Receipts – sending your monthly donors one consolidated receipt is a great tool for both you and the donor. Keep in mind not all donations can appear as part of a consolidated receipt. Do not include gifts that contains an advantage, gift in kind donations, gifts of stock or property as part of consolidated receipting. Each type of donation requires details specific to the donation and, therefore should not be consolidated.
International Donations – if you receive gifts from donors living outside the country where your organization is based. A tax receipt from your country may not be useable by this donor. Your organization should have a policy about whether or not these donations are receiptable. However, it’s simply a matter that your donor vacations elsewhere and your tax receipt should be mailed elsewhere that's a different scenario.
The key to ensuring the tax receipting season does not become overwhelming is to mark your databases with the appropriate codes to ensure the items listed above can be sorted and filtered. Do not forget your own internal business rules. So start early and stay on top of these clean-up tasks.
If you have any questions about how to get your specific database ready for the upcoming season reach out to us here. We are always happy to talk shop.
If you would like us to tackle a topic or problem of interest to you, in future articles, please let us know here.
Sentinel Consulting is a consulting firm that focuses on helping non-profits strengthen their operational efficiency. We speak the same language as our clients because we were all fundraisers at some point in our careers.