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Donation Agreement Template (Free Download + AI Generator)
Greg Mitchell | Legal consultant at AI Lawyer
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A Donation Agreement (sometimes called a Gift Agreement or Donor Agreement) is a legal contract between a donor and a recipient (such as a nonprofit, institution, or individual) that sets out the terms under which a donation is made. It covers what is being donated, how and when it will be delivered, how it may be used, any restrictions, and the rights and obligations of both parties. Well-crafted Donation Agreements protect both donor and recipient, ensuring clarity, legal compliance, and the donor’s intent is honored.
According to the Giving USA 2025 report, total charitable giving in the U.S. reached USD 592.50 billion in 2024, growing 6.3% in current dollars and 3.3% after adjusting for inflation. Individuals, foundations, corporations and bequests all contributed. Also, the U.S. nonprofit sector comprised 5.2% of GDP, contributing USD 1.4 trillion to the economy in 2023. These figures emphasize how central donation agreements are to governance and trust in this vast ecosystem.
Download the free Donation Agreement Template or customize one with our AI Generator — then have a local attorney review before you sign.
This guide is part of our Financial Agreements series — guiding individuals and businesses through secure money management and lending practices.
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1. What Is a Donation Agreement
A Donation Agreement is a legally enforceable document that captures the donor’s intent, the recipient’s obligations, and terms around any restrictions or conditions attached to a gift. It may cover cash, property, in-kind contributions, or services.
It should specify whether the gift is conditional (e.g., matching, contingent on other funding, tying to a particular project) or unconditional. It also lays out timelines for delivery and use, reporting requirements, recognition of donor, and provisions for what happens if the recipient cannot fulfill the intended purpose.
By having a written agreement, both sides guard against misinterpretation, misuse, or disappointment, and ensure accountability.
2. Why Donation Agreements Matter in 2025
Donation Agreements matter today not only because giving is large in scale, but because of how donations are structured and scrutinized. Digital platforms now account for a growing share of contributions: in 2024, online giving grew by 6.4% year-over-year, reflecting the importance of transparency in digital transactions.
Additionally, philanthropic trends are shifting toward impact-driven gifts, where donors require measurable outcomes for their contributions. Nonprofits are under greater pressure to show compliance, report on restricted funds, and adhere to donor-imposed conditions. At the same time, regulators in the U.S., UK, and EU continue tightening oversight of large gifts, especially cross-border transfers, to combat fraud and money laundering.
Together, these dynamics make written Donation Agreements essential tools for accountability, legal compliance, and building long-term donor trust.
3. Key Clauses and Components
A complete Donation Agreement should include:
Parties: Names and legal status of Donor and Recipient, addresses, tax-exempt status if applicable.
Description of Donation: What is being donated (cash, property, services, in-kind), quantity or value, condition and quality if applicable.
Purpose and Use Restrictions: Any restrictions on use (e.g. for specific program, capital project, scholarship) or designation.
Delivery and Timing: When and how the donation is delivered; schedule if in installments.
Reporting, Monitoring & Use: How recipient will report use of funds, invoices or receipts, donor recognition.
Acknowledgment & Publicity: whether donor will be named, credited, or remain anonymous.
Tax & Legal Compliance: Compliance with tax law, valuation of in-kind gifts, donor’s rights to receive receipts.
Representations & Warranties: Authority of parties, condition of donated property (if any), ownership.
Termination or Reversion Clause: What happens if funds are not used as intended, or recipient ceases operations.
Governing Law & Dispute Resolution: Jurisdiction, choice of law, procedures for resolving conflicts.
4. Legal Requirements by Region
United States: IRS requires acknowledgment of charitable donations for tax deduction; Form 8283 for non-cash contributions above certain thresholds. Gift restrictions must comply with state law and nonprofit governance rules. Reporting and audited statements may be required.
United Kingdom: Donations to registered charities are regulated; Gift Agreements may need to comply with the Charities Act. Donor restrictions that conflict with charitable purpose might be void.
Canada: Charity law in each province governs restrictions, in-kind donations, and fair market valuation rules. Federal regulation (Canada Revenue Agency) requires proper receipts for tax purposes.
European Union / Other Jurisdictions: GDPR or data privacy laws affect how donor information is handled; national laws regulate gift restrictions and nonprofit status; some jurisdictions require registration for large gifts or property donations.
5. How to Customize Your Donation Agreement
To ensure the agreement reflects real needs and expectations:
Tailor purpose restrictions tightly: for example, specify program, location, or eligible recipients.
If donating property, define condition and transfer terms (inspection, shipping, insurance).
For multi-year or installment gifts, include payment schedule and fallback if a payment is missed.
Include reporting intervals (annual, quarterly) and which metrics are important to donor.
Decide on donor recognition: public acknowledgment, naming rights, or anonymity.
Plan for reversion or redirection of funds if original purpose becomes impossible or recipient ceases functioning.
6. Step-by-Step Guide to Drafting It
Use these steps to draft a thorough Donation Agreement:
Step 1 - Clarify Donor Intent: Discuss what the donor wishes to achieve, restrictions, recognition, and use of funds.
Step 2 - Determine Donation Type: Cash vs in-kind vs property; non-cash gifts need valuation and condition statements.
Step 3 - Draft the Clauses: Use the key components: purpose, delivery, restrictions, reporting, acknowledgment.
Step 4 - Include Legal Protections: Representations and warranties; reversion clauses; compliance with applicable laws.
Step 5 - Review Tax Implications: Ensure tax receipt, valuation, and donation deductibility align with law.
Step 6 - Accept and Acknowledge: Recipient accepts donation under the terms; acknowledgment receipts are issued.
Step 7 - Execute Agreement: Signatures from donor and authorized recipient; dates; witnesses or notarization if required.
Step 8 - Monitor Use and Reporting: Recipient follows through with use; donor gets reports; ensure restrictions followed.
7. Tips for Ensuring Validity and Trust
Use plain, unambiguous language so donor’s intent is clear.
Confirm that recipient organization is lawfully registered and in good standing.
For in-kind gifts, evaluate condition and shipping cost, and document valuation.
Maintain copies of all documentation — agreement, receipts, acknowledgment letters.
Include oversight or accountability mechanisms.
Ensure agreements are stored and accessible for audits or reviews.
8. Checklist Before You Finalize
Both parties (Donor & Recipient) legal names and statuses included.
Description of what is donated, condition, and value.
Purpose or any restrictions clearly specified.
Delivery method and schedule outlined.
Reporting and use obligations included.
Acknowledgment, publicity, or anonymity terms addressed.
Legal and tax compliance clauses included.
Reversion or alternate use if purpose impossible.
Signatures, dates, and any required witnessing.
Download the Full Checklist Here
9. Common Mistakes to Avoid
Ignoring restrictions or using vague purpose language.
Forgetting to document condition or value for in-kind donations.
No reversion clause when the original purpose can’t be met.
Overlooking donor recognition or privacy preferences.
Missing tax compliance or proper acknowledgment forms.
Failing to monitor or enforce restricted use of donation funds.
10. FAQs
Q: Is a Donation Agreement legally binding once signed?
A: Yes. Once both donor and recipient sign and accept the terms, the agreement becomes binding to the extent that the terms are lawful and the donor has provided consideration (i.e., the gift). For conditional gifts, meeting the condition is essential for enforceability. Courts may invalidate agreements that conflict with public policy or charitable law. Ensuring proper execution and clarity strengthens enforceability.
Q: What kinds of donations require special documentation or valuation?
A: Non-cash gifts like property, artwork, securities, or services usually require valuation. For example, IRS rules in the U.S. demand Fair Market Value documentation for non-cash donations exceeding certain thresholds, and recipient’s acknowledgment. Detailed descriptions of condition and authenticity may be needed. Valuation also matters for tax deductions, insurance, and legal clarity.
Q: Can I impose restrictions on how the donated funds are used?
A: Absolutely. Donors often impose restrictions by purpose, timeframe, geography, or project. These should be clearly written in the agreement. However, restrictions must be lawful, not violate nonprofit bylaws or charitable regulations, and realistic. If the restricted use becomes impossible, reversion or redirection terms help prevent misuse or dead agreements.
Q: What happens if the recipient fails to use the donation as agreed?
A: Many agreements include breach or reversion clauses, which allow the donor to reclaim funds, redirect them, or require the recipient to refund or transfer obligations. Legal remedies may depend on statutory law or contract law in the jurisdiction. Donor should keep all documentation and possibly seek mediation, arbitration, or court enforcement if misallocation or misuse becomes clear.
Q: Are there tax benefits for the donor, and how do they work?
A: Yes, in many jurisdictions, donors can receive tax deductions for qualified donations. The donor must have a proper receipt or acknowledgment from the nonprofit, and the donation must meet legal criteria (e.g., cash vs property, documented valuation). If donating appreciated assets, capital gains rules may apply. Both donor and recipient should verify with a tax professional.
Sources and References
Charitable giving data are drawn from the Internal Revenue Service (IRS) – Charitable Organizations, which reported total U.S. charitable donations of USD 592.50 billion in 2024 — a 6.3% nominal and 3.3% real increase over 2023.
Economic and sector context references the National Center for Charitable Statistics (NCCS) and the U.S. Bureau of Economic Analysis (BEA), which note that nonprofits accounted for roughly 5.2% of U.S. GDP and contributed USD 1.4 trillion to the economy in 2023.
Legal and tax compliance guidance draws from the Internal Revenue Service (IRS) Charitable Contributions Guidelines and Form 8283 instructions for non-cash gifts.
International charity regulations are informed by the UK Charity Commission guidance on donations and restricted funds, the Canada Revenue Agency (CRA) Charities Directorate, and EU GDPR for donor data privacy.
Together, these sources reflect the 2025 standards for transparency, compliance, and donor-recipient accountability in charitable giving.
Disclaimer
This article is for informational purposes only and does not constitute legal or tax advice. Laws vary by jurisdiction and change over time. Always obtain advice from a licensed attorney and accountant before preparing or signing a Donation Agreement.
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A Donation Agreement protects donor intent, formalizes obligations, and builds trust. Drafting one carefully helps ensure funds are used as intended, protects reputation, and supports long-term relationships.
Download the free Donation Agreement Template or customize one with our AI Generator — then have a local attorney review before you sign.
Explore more resources in our Financial Agreements series to secure your money management and lending practices.
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