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Best Practices for Mailing Tax Statements

Santa Claus has come and gone which can only mean one thing – tax season is upon us! Although charitable organizations are not required by law to mail tax statements to their donors*, doing so can be beneficial in a number of ways. It offers your donors a service and thanks them for their contributions over the past year. It also reminds them to plan ahead for additional contributions in the coming year and serves as an additional touchpoint between organization and donor that can be executed with relative ease and at a low cost. 


Here are a few tips on how to make a tax statement mailing work for your organization:


Be Timely

It’s recommended that you have your tax statement in home by mid to late February. This is when most households are starting to think about tax preparation. Be sure to capture all gifts from the previous year. You’ll want to work closely with your caging company, data house, printer and lettershop to come up with a schedule that works for all parties. Your tax statement mailing will have a more condensed timeline than a typical mailing.


Know Your Audience

All active donors—anyone who gave a gift in the previous year—should be included in the tax statement mailing. The letter text should thank them for their generosity to your organization and include an itemized receipt of their total giving for that year. Include details or examples of what your organization was able to accomplish with their gifts. Let them know how much your organization is looking forward to their continued support in the coming year.


What about those donors that did not give in the previous year? It’s suggested that these “lapsed” donors are mailed as well but consider an alternate package (preferably keeping the same specifications as the tax statement to help manage costs). Adjust the tax statement copy accordingly. Indicate that no gifts were received in the previous year and let them know that you’d love for them to donate again.


Keep it Simple

This is essentially a receipt so a simple, transactional approach is usually best. Avoid things that typically drive up costs such as the use of four color photos or component matching. A #10 window outer envelope, a personalized 8.5” x 11” letter or 8.5” x 14” letter/reply and a #9 reply envelope is the tried and true package format. However, when it comes to your higher dollar donors, you may want to consider other treatments such as the use of a first class stamp or a closed-face carrier with component matching. 


Allow for Flexibility

Your organization has donors with all sorts of giving frequencies. Odds are the majority of them gave only once or twice over the course of the previous year but there will be those that gave multiple times, especially if your organization has an active sustainer or monthly giving program. Work with your data house to obtain a frequency report that will show you the number of gifts by donor. 


Each individual gift should be listed within the body of the letter. Copy should be clear and concise and the layout should be flexible enough to work for donors of all frequencies. Limit pre-printed elements and laser the text and art elements wherever possible.


Comply with Rules and Regulations

The US Postal Service (USPS) considers including a donor’s giving history to be “personal information.” If you include personal information within your correspondence, there are some requirements that must be met in order to mail at nonprofit rates. It pays to look over your content and design carefully to ensure you’re in compliance. Here’s what you need to know:


1. The mail piece must contain explicit advertising for a product or service for sale or lease or an explicit solicitation for a donation.


2. All of the personal information must be directly related to the advertising or solicitation.


3. The exclusive reason for inclusion of all of the personal information must be to support the advertising or solicitation in the mail piece.


While this may seem daunting, it’s fairly easy to satisfy these requirements. The USPS does give some leeway with the solicitation by allowing it to be monetary or non-monetary. So if you don’t wish to include a specific dollar ask, you can thank your donors for their “continued support” and indicate that you hope their support will go on in the future. Or you can ask them to volunteer, read literature that supports your mission or return a survey or card. Most calls to action that would normally be included in a direct mail appeal will suffice. To satisfy the third requirement, avoid phrases like “tax receipt” or “keep for your records.” Refrain from using wording that indicates that the giving history is for any purpose other than the ask.


We recommend including a request for donation. You’ve just thanked your donors for their generosity, included an itemized receipt of their total giving for that year and let them know what your organization was able to accomplish with their donations. What better time to request another gift?


If you need further assistance crafting your organization’s tax statement strategy please don’t hesitate to reach out to CDR.


*IRS rules vary by organization type. Before launching a campaign of this nature it’s recommended you read IRS Publication 1771, “Charitable Contributions–Substantiation and Disclosure Requirements”. It explains the federal tax law for organizations such as charities and churches that receive tax-deductible charitable contributions and for taxpayers who make contributions.


Pete Cline

Associate Account Director