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I'm trying to send end of year tax letters to donors. I want to customize the letters/emails with their total donation amount for the whole year. I understand I need to activate "smarty" to be able to do this, however, I can't find where this needs to be configured or enabled.

any guidelines would be really appreciated!

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Welcome to StackExchnage Aida. Activating smarty is usually done in the file civicrm.settings.php.

However for what you have in mind you may want to take a look at the extension "Summary Fields". It prvides certain information / data such as the total contribution amount in custom contact fields which allows you to easily use them in emails or letters.

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    The setting in civicrm.settings.php is if (!defined('CIVICRM_MAIL_SMARTY')) { define( 'CIVICRM_MAIL_SMARTY', 1 );
    – Mick Kahn
    Feb 10 at 13:15

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