How to Accept Donations for a Nonprofit

Get 501(c)(3) Status Before You Promise a Tax Deduction

A nonprofit corporation can legally accept money the moment it has a bank account, but donors can only deduct their gifts once the organization has recognized 501(c)(3) status. If you solicit donations while your exemption application is still pending, be accurate with donors about that status; if the IRS later approves the application and you filed within 27 months of your legal formation date, the exemption is typically effective back to that formation date, which can make earlier gifts deductible retroactively. Don't promise deductibility you can't yet back up.

Set Up the Basics: Bank Account and Payment Processing

Open a dedicated nonprofit bank account using your EIN, never a personal account, so donations are clearly the organization's funds from day one. From there, decide which payment channels you'll support: checks and cash for in-person and mail-in giving, a payment processor or donation platform for online credit card and ACH gifts, and potentially a donor-advised fund or employer matching gift portal if your supporter base uses those. Each processor charges its own transaction fees, which is a routine cost of accepting online donations, not something that affects a gift's deductibility.

The $250 Written Acknowledgment Rule

For any single contribution of $250 or more, the donor needs a contemporaneous written acknowledgment from your organization before they can claim the deduction; the law puts the burden on the donor to request it, but it's standard practice for nonprofits to send one automatically. The acknowledgment must state the amount of cash contributed, or describe (without valuing) any noncash property given, and say whether your organization provided any goods or services in exchange. If it did, the acknowledgment must include a good-faith estimate of their value. There's no required format, a letter, email, or year-end statement all work, as long as it contains this information and the donor has it by the time they file their return for that year, per the IRS.

Quid Pro Quo Contributions Over $75

When a donor gives more than $75 and receives something of value in return, such as a gala ticket, a thank-you gift, or event admission, your organization must provide a written disclosure statement, either when soliciting the gift or when receiving it. The statement needs to tell the donor that only the amount of their payment that exceeds the value of what they received is tax-deductible, and it must include a good-faith estimate of that value. This is a separate requirement from the $250 acknowledgment rule and applies at a lower dollar threshold specifically because something of value changed hands.

Accepting Non-Cash and Stock Donations

Many nonprofits also accept donated property, publicly traded stock, or in-kind goods. Your organization should never list a dollar value on the acknowledgment for noncash property; that valuation is the donor's responsibility, not yours. If a donor claims a deduction of more than $5,000 for donated property, they generally need a qualified appraisal and your organization's signature on Form 8283, acknowledging receipt (not value) of the item. If the organization sells or disposes of significant donated property within three years of receiving it, it may need to file Form 8282 reporting that disposition to the IRS and the donor.

Register Before You Fundraise Across State Lines

Federal tax-exempt status doesn't automatically authorize a nonprofit to solicit donations in any state. Many states require a separate charitable-solicitation registration, often renewed annually, before an organization asks residents of that state for donations, whether through direct mail, an online donation page accessible nationwide, or in-person fundraising. Check each state where you actively solicit donations, not just your state of incorporation, and register before launching a multi-state campaign rather than after.

Build a Simple Donation Policy Early

A short written gift-acceptance policy, covering which kinds of gifts you'll accept (cash, stock, property, in-kind goods), who's authorized to accept them on the organization's behalf, and your standard acknowledgment process, keeps a growing donor base consistent and gives your board and any grantmakers reviewing your practices something concrete to point to.

Automate Acknowledgments as Your Donor Base Grows

A donation platform that automatically emails a compliant written acknowledgment for every gift over $250 saves significant manual work once you're receiving more than a handful of gifts a month, and reduces the risk of simply forgetting one, which puts the donor's deduction at risk even though the compliance burden technically falls on them.

Don't Mix Restricted and Unrestricted Gifts

If a donor specifies that a gift must be used for a particular program or purpose, track that restriction separately from general operating donations. Spending restricted funds on something else, even temporarily, can create both a legal problem with the donor and a disclosure issue on your Form 990.

Crowdfunding Platforms Don't Automatically Make a Gift Deductible

Running a campaign through a general crowdfunding site, rather than a platform built specifically for 501(c)(3) giving, can leave donors without the documentation they need to claim a deduction, or can route the funds through a structure where the platform, not your nonprofit, is technically the recipient. Confirm how any platform you use handles acknowledgments and the flow of funds before relying on it for tax-deductible giving.

This Is Not Legal or Tax Advice

The specific acknowledgment language, state registration requirements, and rules for non-cash or restricted gifts can get complicated quickly as a nonprofit's fundraising grows. Talk to a tax professional about your acknowledgment process and a nonprofit attorney about multi-state charitable-solicitation registration before a major fundraising push.