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Online Donation Portals Ease Contributions, Receipt Process

Online giving makes it easier to donate to your not-for-profit, which encourages more giving. And, partnering with another organization to handle back-office donations frees you to focus on your main mission.

Partnering up

Many 501(c)(3) organizations are finding that it makes sense to combine forces with an online donation portal such as Network for Good, JustGive.org or a community foundation with a federated giving program. In either scenario, not-for-profits use the online donation services of another organization to avoid reinventing the proverbial wheel.

If you align with an online donations partner, that company will tell you what you need to do technology-wise to get the service up and running. Once it’s launched, donations that begin on your Web site automatically bounce to your partner’s site, where they’re processed.

In short, the giver decides on the amount to give and gives it; the online portal handles almost everything else including online security. Network for Good, for example, assures that  donations will be made safely and your personal information will not be shared with others without your permission.

Your partner receives a portion of each donation, generally 3% to 4.5%. To encourage further giving, the portal typically offers the contributor the option of taking the "commission" out of the donation or adding to it. For example, someone who donates $100 to a food pantry can choose to give $104.50 so that the charity receives the full $100.

Generating receipts

What’s especially useful is that the portal automatically sends the giver a confirmation e-mail after the contribution is completed. Contributors can print the confirmation page—with the amount donated, the name of the charity, the date and an acknowledgment that the funds have been received. This can also serve as a receipt for tax purposes.

Automatic receipt generation is especially important because of recent changes in substantiation requirements. Under the Pension Protection Act of 2006, individuals must substantiate all charitable contributions regardless of the amount given. The IRS will likely consider an e-mail receipt as an acceptable record of donation. 

Showing benefits, creative ideas

Information on the portals helps contributors see the tax benefit of their charitable contributions. JustGive.org, for example, displays a chart that shows the deduction for people in various tax brackets who make cash donations of $100. It also explains how Form 1040 instructions help givers determine the exact amount of their deduction, which varies depending on their tax bracket and whether they file as a single person or jointly.

The portals also encourage creative giving. For instance, at holiday time, the Network for Good suggests "out of the (gift) box" ideas such as making donations to a charity in honor of the people on one’s holiday list. The portal will send an e-card to the recipient notifying them of the gift in their name.

Easing, encouraging donations

Of course, it’s smart to have your tax advisor review your practices for accepting donations and giving receipts. Remember, your job is twofold: Make it as easy as possible for contributors to donate to you and, in turn, help them get a tax benefit for their good deed. 

Questions on online donating?
Contact Lu Ann Trapp at 312-980-3281.

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.