Year-End Giving: How to Record December Donations in the Right Year

Several different dates are in play. Getting them straight protects your donors and your books.

Three dates, three different questions

• The donor's tax date is when a gift counts on the donor's federal return. IRS Publication 526 says donors deduct contributions only in the year they actually make them. That means an unpaid pledge is not yet deductible.
• Your received date is when the gift actually reached your organization. Your deposit date is when it hit the bank. They are not the same thing.
• Your bookkeeping date is when your accounting method says to record it.

These can differ. Your bookkeeping does not decide a donor's deduction: a donor may properly claim a gift in 2026 that you record in 2027.

Cash basis, accrual basis, and promises

Under cash-basis bookkeeping (recording money when it comes in), a gift is generally recorded when you receive it, not when you get around to depositing it. Cash and checks in hand on December 31 belong to December even if they reach the bank in January; holding a deposit does not move a gift into the next year. If your organization uses a modified cash approach, it should fit your reporting needs, be reviewed by your accountant, and never be used to shift year-end receipts into another year.

Under accrual-basis bookkeeping (the method used in GAAP financial statements), a no-strings promise to give is recorded when it is made, even if the money arrives later.

A promise is conditional when the agreement has both a hurdle the organization must clear and a right for the donor to take the money back or walk away from the promise, per FASB ASU 2018-08. Conditional promises are generally not recorded until the hurdle is cleared. A member's no-strings $5,000 pledge is unconditional. A foundation's $20,000 promise that depends on serving 100 families, and can be pulled back otherwise, is conditional.

What happens in common December scenarios

• Check mailed in December, received in January. For the donor, Pub 526 says a mailed check is considered delivered on the date it is mailed, and Treas. Reg. 1.170A-1(b) adds that the check must clear in due course. The date written on the check does not control; a December-dated check mailed in January is a January gift. For your books, the check was received in January. Keep the envelope and note the postmark so the donor's statement is right.
• Hand-delivered check. Pub 526 looks to unconditional delivery. Log the date and who received it.
• Online card gift. Pub 526 says a card gift is deductible in the year the donor makes the charge, even if the processor pays you in January. Credit the donor for the charge date. How your books handle charges made in December but paid out in January should be spelled out in your written policy and applied consistently.
• ACH or bank transfer. Pub 526 does not specifically address ACH gifts, so keep the bank record showing when the funds were actually paid.
• Appreciated stock. Under Pub 526, a properly signed-over stock certificate is delivered when mailed or delivered to the charity or its agent. If it goes through the donor's broker or the issuing company to be put in your name, the gift is not complete until the transfer is recorded on the company's books. Electronic transfers can take days, so ask donors to start early, keep the broker's confirmation, and point donors to their own adviser. For the organization's books, record the stock at its fair market value on the date the gift is complete. That value is for your records only; the donor's receipt describes the shares without assigning a value.

Acknowledgment letters and quid pro quo disclosures

Per IRS Publication 1771, a donor cannot claim a single contribution of $250 or more without a contemporaneous written acknowledgment (a timely written receipt from you). It must include:

• your organization's name;
• the cash amount, or a description (not the value) of donated property;
• a statement that no goods or services were provided, if that is true; otherwise a description and good-faith estimate of what was provided. A religious organization giving only intangible religious benefits says so.

The donor must have it by the earlier of the date they file or their return's due date, including extensions. Many charities send them by January 31 as good practice. One annual summary can cover several gifts, but separate gifts under $250 are not added together. Without it, the donor may lose the deduction.

A quid pro quo contribution is a payment that is partly a gift and partly for goods or services. When the payment exceeds $75, Pub 1771 requires you to give a written disclosure with a good-faith estimate of the value received and a note that only the amount above that value is deductible. If a donor pays $100 for a banquet ticket worth $40, the deductible portion is $60, and a disclosure is required because the payment exceeds $75.

Gross gifts, processor fees, and net deposits

For example, say a donor gives $100 online, the processor keeps $3.20, and your bank receives $96.80. Generally, record the $100 gift and the $3.20 fee separately rather than booking only $96.80. Acknowledge the $100 the donor gave. Reconcile gross, fees, and net by payout batch, including January payouts.

Record donor restrictions as the donor stated them, such as "missions" or "building fund," and track them until spent. A restriction is not the same as a condition, and you cannot lift one because the money is needed elsewhere.

A simple cutoff process for January checks

Adopt a written December 31 cutoff policy, have it reviewed, and follow it the same way every year. Log every gift with its received date, deposit date, method, and restriction. Gifts in hand by December 31 are December receipts even if deposited in January. For checks that arrive in January with a December postmark, handle the two questions separately: note the postmark for the donor's statement, and record the receipt according to your policy. Never change the actual receipt, mailing, or deposit dates to force a gift into a preferred year. Proper year-end adjusting entries can be prepared later with supporting records.

Year-end checklist

• Confirm your accounting basis and written gift-recognition and cutoff policy
• Log received date, deposit date, method, and restrictions for every gift
• Count and record all gifts on hand at December 31, even if deposited later
• Keep envelopes, processor reports, and broker confirmations
• Reconcile processor gross, fees, and net through the last payout
• Classify pledges as unconditional or conditional
• Send acknowledgments for gifts of $250 or more (by January 31 is good practice), with the no-goods-or-services statement when true
• Send quid pro quo disclosures for payments over $75
• Have your treasurer or finance committee, and your outside accountant if you have one, review the cutoff

A short disclaimer

This article is for general educational purposes only. I am a bookkeeper, not a CPA, attorney, or licensed tax adviser, and nothing here is individualized tax, legal, or accounting advice. Rules have exceptions, IRS publications are updated, and your facts matter. Talk with your own tax professional or auditor about your organization, and donors should consult their own advisers.