How to Generate Tax Receipts in Salesforce: Native Options and Limitations

Fundraising is at the core of every nonprofit organization. When constituents donate to your cause, they express a deep connection to your organization and its mission. As a nonprofit, it’s your duty to provide a receipt they can submit with their yearly tax statements.

If you’re a very small nonprofit, tax receipts can often be handcrafted using basic tools like Microsoft Word or Google Docs. You gather the donor’s gift information in Salesforce and then replace fields like donor name and gift amount in a reusable template.

As your organization grows, this fully manual process becomes unmanageable. The next popular step is to consider a document generation tool. After all, what is a tax receipt but a specialized document to thank donors for their support?

However, it’s important to understand that document generation tools are focused on layouts and have multiple purposes. A tax receipt is a legal document and often has regional compliance requirements.

In addition, it’s not just a matter of issuing a single tax receipt per donation. Sometimes donors want to receive receipts by email or by mail. Sometimes donors want a consolidated receipt for all their gifts. Sometimes donors change their address and need to have this reflected in their tax receipt.

Also consider that some donors are not eligible to receive a tax receipt. Examples include other nonprofit organizations or foundations, and board members. In these cases, you may want to send them an acknowledgment instead.

Lastly, in this digital age, if a donor donates online, they expect to receive a tax receipt in near real-time. These situations cannot be easily managed with a document generation tool.

Where Tax Receipting Exists in Salesforce Today

As we dive deeper into understanding how tax receipts work, it’s important to consider that there are two data models currently being used by nonprofits in Salesforce.

Depending on which model you are using, the information to be used in the tax receipt will be taken from different sources.

Nonprofit Success Pack

The first data model is the tried and true Salesforce Nonprofit Success Pack (NPSP). NPSP has been around for many, many years. It’s a managed package that’s installed on the Salesforce platform. 

For gift management in NPSP, the main objects are:

• Opportunity: the majority of the gift information, such as the gift date, donor name, and gift amount.
• Recurring Donation: if the donor is a monthly donor, they will have a single Recurring Donation and one related Opportunity per month.
• Payment: the payment details.

Agentforce Nonprofit

The more recent data model is called Agentforce Nonprofit, which was previously known as Salesforce Nonprofit Cloud.

For gift management in Agentforce Nonprofit, the main objects are:

• Gift Commitment and Gift Commitment Schedule: If the donor makes a pledge or a planned gift, details are stored in the Gift Commitment. Also, if the donor is a monthly donor, they will have a single Gift Commitment, and the recurring information is stored in the Gift Commitment Schedule.
• Gift Transaction: the majority of the gift information, such as the gift date, donor name, gift amount, and payment details

How Native Salesforce Tax Receipting Works

If your nonprofit is using Agentforce Nonprofit, Salesforce offers a native way to generate tax receipts. 

Setup

The one-time setup process must be done by a Salesforce Administrator: 

1. Create a Word document to be used as a template for tax receipts and acknowledgments. Merge fields are placed within the document, but there isn’t an easy-accessible library to know which fields can be used and what their naming conventions are.
2. Enable “Design Document Templates in Salesforce” from the setup menu.
3. Enable permissions by creating a public group. Only users in this group will be able to issue tax receipts.
4. Provide each user within the group with the DocGen User permission set.
5. Go to “Design Document Template” and upload the Word document as a template. Be sure to activate the document. 
6. This will create a File Library called “DocGen Document Template Library”. Give the public group Viewer access to this library.
7. Add the button “Generate Document” to the person account page layout. 
8. Add the button “Generate Document Batch” to the home page of the application “Fundraising Operations”.

Usage

Once setup is complete, eligible users can generate tax receipts for a single donor or in a batch.

For single donors:

1. Go to a Person Account and click the button “Generate Document”.
2. Select options such as Start Date and End Date.
3. Click the button “Generate”.

For batches:

1. Go to the home page in the application “Fundraising Operations” and click the button “Generate Document Batch”.
2. Select options such as Start Date and End Date.
3. Click the button “Generate”.

Limitations Admins Should Know

While the Salesforce approach is native, there are important considerations and limitations.

1. This functionality is only available for Agentforce Nonprofit. If you are using NPSP, this is not an option for you.
2. For the receipt template, you are limited to certain standard fields on certain standard objects. In addition, only one custom field can be added.
3. The syntax for merge fields in the template isn’t clear, so lots of testing is required.
4. When creating tax receipts in a batch, your filter criteria are limited.
5. You cannot create acknowledgments for soft credits or tributes.
6. Mechanisms for voiding and re-issuing receipts need to be custom-built.
7. Nothing prevents you from creating duplicate receipts.
8. Once receipts are generated, emailing or printing them to multiple donors can be very time-consuming.
9. Local regulations aren’t enforced and need to be custom-built.

When Third-Party Tools Make Sense

While Salesforce’s approach technically works, it’s very basic. This is similar to the minimal functionality offered to export data, and comes without an option to easily restore data.

If you don’t want to customize the missing elements or find the basic functionality too limiting, there are other options.

Your best choice is to use a third-party application that’s dedicated to generating tax receipts. Purpose-built applications provide tons of functionality that’s focused on tax receipts. 

Some receipt-specific functionality includes:

• Manage donor preferences, such as how to receive receipts (email or by mail), receipt occurrence (a single receipt per gift or a consolidated receipt per multiple gifts), and receipt language.
• Able to handle large volumes of recurring donations and non-recurring donations.
• Able to easily void and re-issue receipts, in which the replacement receipt references the original receipt.
• Extensive filter criteria to select eligible gifts.
• Easy customization of the receipt template with merge fields.
• Mass emailing receipts directly from Salesforce.
• Support for a federated charity model, where multiple taxable organizations are using a single instance of Salesforce.
• Automatic advantage calculation, for in-kind gifts.
• Able to further customize the application to your specific needs.

One of the most popular and top-rated tax receipting applications on the AppExchange is Dryad Receipting for Salesforce. 

Dryad Receipting was initially designed for Canadian charities, as the Canada Revenue Agency (CRA) has very strict regulations on how and when tax receipts are issued. The app now fully supports issuing IRS-compliant tax receipts, as well as regulations for most countries around the world.

Some of the features unique to Dryad Receipting include:

• Unlimited users.
• Unlimited receipt generation.
• There are no usage costs.
• Receipts are created natively within your Salesforce instance, keeping it highly secure.
• Designed by a Salesforce Architect who is also User Experience (UX) certified.
• Looks native yet provides a tremendous amount of functionality.
• New features are added five to six times a year, with no additional charge for upgrading.
• Supports both Agentforce Nonprofit and NPSP.

To learn more, you can book a live demo of Dryad Receipting.