Many consumers make donations to their favorite charities every year. They want to help others and also sponsor a particular cause they are interested in. Many donations are small denominations, ranging from $5 to several hundred. But what do you do if you are donating a large amount? Whether it is a monetary donation or property of some kind, you may want to have some say in how your donation will be used. There may also be tax consequences to the donation, which should be documented and included with tax filings.
Without indicating how your donation is to be used, the charity may funnel your money into general operations and used it to fund their current priorities. One method of exerting some control regarding how your donation will be used is to prepare a document, “letter of intent to donate”.
How to Write a Letter of Intent to Donate
The Letter of Intent to Donate simply specifies the terms and conditions of your donation, how it will be used and requires the charity to agree to use your donation in the manner specified. It makes it very clear for both parties. Using a Letter of Intent to Donate, can avoid future misunderstandings and ensure that your contributions make a difference in the areas you are trying to help.
A sample Letter of Intent to Donate is included at the end of this post. The following provides a bit more information about the topics that should be included to avoid any miscommunication.
- Date of Agreement: it is surprising how many people forget to include the date in a letter. Without the date, there is no frame of reference for when the donation agreement was effective.
- Subject: always indicate the type of donation in your subject.
- Donor: the person or persons or trust making the donation. This is important to get the right entity listed for tax purposes if you are claiming a tax deduction and also for recognition of the donation.
- Donee: the person or persons or trust receiving the donation with similar consequences for tax claims.
- Donation: state what the donation is and the value of the donation. If a property is involved, a recent appraisal may also be required.
- Designation: large charities have many initiatives. If there is a favorite one, or you would like your donation to be used for a specific purpose state it in this section.
- Changes to the Designation: occasionally the donation cannot be used for the intended purpose. If you are ok with the Donee redirecting the funds to another purpose, you should indicate your agreement and any conditions you may have.
- Recognition of the Donation: Some people want to be recognized in a specific manner while others would like to remain anonymous. This is where you would state your preferences including the exact names to be used.
- Payment Method: in today’s world of eCommerce, there are many ways to transfer cash and property. The agreed transfer method should be acceptable to both parties.
- Type of Organization: donors looking for a tax deduction should specify the organization meets IRS requirements for charities and tax-deductible claims.
- Currency: specify the currency, particularly if either party is in a different country.
- Governing Law: Indicate which laws govern the transaction, country, and state.
- Agreement: the agreement is not legal until both parties have signed and dated the document. The signatories to the document should also have the authority to enter into these types of agreements within their organizations.
Sample: Letter of Intent to Donate
Date of Agreement: Enter the date you sign the agreement
Subject: Letter of Intent to Donate
This letter covers the general terms and conditions covering our donation and is considered binding between the parties once both parties have signed and dated the agreement.
Donor: Your Name here
Donee: Name of charity or organization receiving a donation
Donation: Short description of the donation
Designation: Indicate how the donation is to be used
Changes to the Designation: If changes are needed to the designation, state the conditions if any on how the designation of the donation can be repurposed. E.g. the Donee may be required to respect the intent of the designation as much as possible.
Recognition of the Donation: State whether the donors wishes to receive recognition publicly and state the names of the donors
Payment Method: State Name of Charity and payment method. E.g. check, credit card, e-transfer
Type of Organization: State whether the Donee is considered as a 501(c)(3) and recognized by the IRS as a nonprofit organization for tax purposes as required by law.
Currency: Indicate the currency to be used i.e. US $
Governing Law: The Letter of Intent to Donate shall be governed by the laws of – State of ______
Agreement: Please sign and return a duplicated copy indicating your agreement by no later than (Indicate date)
DONOR
Signature ______________________ Date ______________________
Print Name ______________________
DONEE
Authorized Signature ______________________ Date ______________________
Print Name ______________________
Letter of Intent to Donate (Word Template)
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