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How to fundraise effectively

Fundraising can sometimes seem confusing, even scary… but it needn’t be. You see… great fundraisers aren’t born. They are made. Anyone can become a great fundraiser by learning the principles behind raising money, then practicing over and over again. While some people are naturally gifted fundraisers, for the most part, everyone in the fundraising world started off feeling confused and awkward.

In this section, we present a beginner’s guide to fundraising. The articles on this page represent the basic knowledge you need to get started with raising money for any church, school, or non-profit organization. Your best bet is to read through them in the order they are presented, because the later posts build on the earlier ones:

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How Anyone Can be a Superstar Fundraiser – Great fundraisers aren’t born, they are made. See how anyone can learn how to be a great fundraiser.

Fundraising Isn’t Evil! – If your organization’s mission matters, then fundraising isn’t evil… it’s necessary! Without the money to carry out your programs and vision, your organization will not be able to succeed.

How to Build Your Prospect List – O.k., you’re ready to fundraise, but where do you start? How to build your first prospect list.

What is a Fundraising Ask? – Not all asks are for money. Learn the different types of asks and what makes an effective ask.

How to Ask Anyone for Anything – Whether you’re asking for money, time, talent, volunteer hours, or anything else… this article shows you how to make a great ask… for anything!

How Fundwriter.ai Makes Fundraising Easier – Explore Fundwriter.ai, an AI writing assistant that drafts appeals, proposals, emails and more, and they’re good!

The 10 Steps to a Successful Fundraising Event – Fundraising events can be a great way to raise money. Use these ten steps to make sure your event is fun and profitable.

Building Fundraising Networks – Grow your fundraising virally by building strong and sustainable fundraising networks.

Effective Fundraising by Mail -Learn how to use direct mail to raise money for your non-profit.

Getting the Crowd Involved with Participatory Fundraising – Walk-a-thons, change bowls, candy sales, and other mass-fundraising efforts can pay off big for your school, church, or charity.

Fundraising on the Internet – How to stay in touch with your donors over the web and raise money effectively on the Internet.

Demystifying Grants – Do you understand the grant-writing process? Here’s how to find and apply for grants…

What to Look for in a Fundraising Database – Four essential features you’ll need in your organization’s next fundraising (or donor) database.

How to Write a Successful Fundraising Plan – Every non-profit, no matter how small, needs a written fundraising plan in order to succeed.

The Fundraising Authority on Twitter – Get great tips on non-profit development every day through Twitter at @FundraisingAuth.

For more information on raising money for your non-profit, check out our Article Archives.

Remember, before you start a new on-profit or new fundraising activity/campaign, check with the organization you are working with and, if necessary, a lawyer in your area to learn the laws and regulations that apply to your fundraising efforts. Laws on fundraising vary by country, state, and municipality. Check with the non-profit you are working with and/or a lawyer before you start.

As someone who volunteers and sits on a number of boards for nonprofits, it is my goal to add value and make an impact by curating thoughtful discourse, making connections or volunteering for events. Inevitably, however, I am asked to do the one thing I dislike most.

My angst for fundraising probably derives from my early and impressionable days as a sales associate, when the idea of “asking for the sale” was beaten into my professional character by people who could best be described as snake oil salesmen.

David Atchley, on the other hand, is a skilled and experienced fundraiser, successfully raising millions of dollars for his client organizations, including universities, economic development centers and cause-based organizations such as the Faison School for Autism.

Atchley approaches fundraising not as a sales pitch, but rather a long-term partnership between organizations and donors — much like an entrepreneur with investors. And like a business, he feels fundraising should be approached and prioritized just like any business goal — with a strategy.

Atchley points out that many non-profit organizations often approach the task of fundraising horribly wrong. To avoid a great deal of wasted time and energy, he suggests the following tips for more effectively creating and executing a fundraising strategy.

1. Set your expectations.

Right off, it is important that you understand that raising money takes time — a lot of time — and a strong, well thought out strategy.

The challenge is that there are tens of thousands of organizations fighting for a very limited pot of money. Also, the grind of raising money every year creates an internal motivation problem as well as an image problem, especially as the organization fails to reach sustainability after a few years.

Your goals, like your strategy, should be long term and highly focused.

2. Refine your value proposition.

Your pitch, or “case for support” as Atchley puts it, is much grander than a few goals for the end of the year. Donors want to know that your impact, and their money, is going to be used for more than a few incremental changes.

As the amount of money you seek increases, Atchley explains, so does the impact you need to demonstrate. Your organization needs to look beyond a flowery vision and develop a “transformation statement.”

How is your organization going to realistically change the world?

3. Understand your IRR.

One of the most effective selling tools you can develop is to clearly understand and communicate your internal rate of return (IRR).

The IRR is a financial measure that demonstrates how a donor’s money is moving the organization toward sustainability. This is especially effective for large donors, who will be more concerned with knowing that their money is going to create a long-term sustainable organization (so you don’t need to ask for more money later) rather than a short-term benefit.

4. Formalize and train your team.

Atchley points out that there are numerous roles in a fundraising strategy, and it is important to pair these roles with individuals in your organization with the relative strengths. These roles include:

  • Engagers: Individuals who will interact, talk and nurture relationships.
  • Connectors: Individuals who can leverage networks and make valuable introductions.
  • Askers: Individuals who understand the skills and timing necessary to ask for the donation.
  • Stewards: Individuals who communicate with and nurture ongoing donors and promote the relationships.

If your goal includes raising a significant amount of money, you should also consider a consultant or professional fundraiser for your team. These individuals have the experience, the network and the skills necessary to take your team to the next level.

While hiring a dedicated fundraiser or consultant can be expensive, they may well be worth the investment if they have a significant impact on your fundraising efforts.

5. Know your audience.

While every non-profit team dreams of securing the support of a large, institutional foundation, understand that most foundations are typically one-time donors. This is because they often wish to spread their impact and ultimately want their gift to lead to sustainability.

Do not ignore individual donors, and always promote and celebrate when you receive a second gift (individuals or foundations who have given more than once), which signals that you are meeting goals and satisfying existing donors.

6. Manage your strategy.

It is easy and indeed common for organizations to “drift” from their fundraising strategy. Responsibilities and ongoing and often unexpected emergencies all add variables that can distract you from your goals.

It is critical, however, that your organization prioritize fundraising plans above all else, and review progress and make adjustments regularly.

This is also a good case for hiring a dedicated fundraiser if it fits into your budget.

7. Get creative.

Like negotiating business deals, there are numerous ways you can engage donors without simply asking for a check.

For instance, you can ask donors to pledge their support with smaller amounts spread out over a period of time. Another strategy is asking a donor to create a “matching gift,” meaning that your organization needs to raise matching funds in a given amount of time to receive the gift. This signals to the donor that you are serious about raising more money and also creates urgency for new donors.

Anyone who runs a non-profit organization understands the immense challenge with raising money. With the right planning, training, team and expectations, your organization can more effectively raise the funds needed to create sustainability and make a long-term positive impact.

As for me, I was happy to finally find a role that better suits my strengths without the need to always be closing.

Do you have experience with nonprofit fundraising? Please share your thoughts and tips with other below in the comments section below.

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Whether you’re fundraising for your local community club, your child’s school, or a local charity, it’s no easy feat. It takes a lot of work as you’re going to have to pull off a great event so that people want to donate to your cause. That’s why we’ve put together this guide on how to fundraise effectively ‘ so you can get all the top tips to make it happen.

WHAT EVENT SHOULD YOU DO?

Doing a fun run is a great way to raise money, as people sponsor individual participants to complete the run (or walk!). This means that each participant can get support from everyone they know, and when you accumulate this with all the participants, it can raise a ton of money.

One of the best fundraising methods is to organise a Colour Frenzy Fun Run, as this way you will have the support of a Colour Frenzy campaign manager to help you along the way. You can even choose to have our team do the entire setup on the day, so you don’t have to do everything yourself.

The fun run is an absolute blast for everyone involved; it’s a run that participants do around a track while getting coated in coloured powder. This is easy for people of any age and ability to participate in as you can easily walk the track or choose a shorter option.

EFFECTIVE FUNDRAISING TIPS

So, how can you make sure that you raise plenty of money for the cause you’re supporting? Don’t worry, we’ve got all the hot fundraising tips for you to make sure you make the most of your Colour Frenzy Fun Run!

Make It Personal

It’s much harder to turn down a personal request for donations than a generic request. People you know will usually be happy to donate when they know the request is coming personally from you.

That’s why we suggest that you prioritise asking people in person when you can, or over the phone. This makes it much harder to ignore the request than sending an email that the recipient can claim they didn’t read or didn’t get. So, only email donation requests to those you definitely won’t be able to see before the big event.

Ask Everyone You Know

Think about it, if you ask your siblings, parents, grandparents, aunts, uncles, and friends, that’s a whole lot of people. Meaning that potentially, it’s a whole lot of funds raised for your cause!

Consider all of the people you can ask to donate. This could be your soccer team, church group, co-workers, and so much more! You should ask everyone in every group you and your family are a part of. This can extend to your partner’s co-workers and friends and parents of your kids’ classmates. You’ll find that with that many people to ask, each person only needs to donate a small amount for you to hit your goal.

Online Fundraising Tools

It can be extremely useful to have access to online fundraising tools to help you get donations. These can easily be shared on social media and via email for people to donate online. This makes it easier both for you to fundraise and for them to get around to donating.

When you do a Colour Frenzy Fun Run, you will gain access to our handy online fundraising tools. These have been specially designed to be safe for children, teachers, parents, and more to use. You can simply click a link to share and fundraise at the touch of a button. Many schools and clubs are enjoying using our online platform as it makes fundraising much easier.

Create Teams

When you create teams, you can potentially raise even more money. First, you can get everyone in the team sponsored by all the people they know. Then you can build a friendly rivalry within the team or amongst other teams to see who can raise the most money. This is a great way to amp up the volume of donations as well as creating a fun atmosphere on the day for the run.

Offer Prizes

Another great choice is to offer prizes to the biggest fundraisers. While it may take a little from your budget, it can be a great motivator to get even more donations. It’s likely if you do this that the extra donations receive will more than cover the cost of prizes.

When you book a Colour Frenzy Fun Run, you get the choice of selecting prizes from our huge online selection. This makes prize selection stress-free for you as the organiser and it’s one less thing to worry about.

Get your school, club, or organisation together for the fundraising event of a lifetime. Get your friends, family, and colleagues to donate and raise a whole heap of money for your cause with these top fundraising tips to help you fundraise effectively.

When it comes to fundraising, it’s important to set realistic goals and maintain a positive attitude. Here are some tips on how to make your fundraiser a success.

Start early!

Make your donation requests personal

How to fundraise effectivelyPeople are much more likely to support you if you let them know why you want their support. Whenever you ask for donations, be sure to tell people why joining the Buds to Blossoms program is important to you. You should also personalize your fundraising webpage so it covers at least some of the following points:

  • why you want to participate in the volunteer program
  • what you expect to get out of participating in the program
  • what you believe the children will get out of your joining the program
  • what kind of updates you plan to provide your supporters during or after the program (such as Facebook, Twitter or blog postings; letters; or in-person presentations)

Kick-start your fundraiser

Let everyone know

Try several fundraising methods

Frequently call attention to your fundraiser

How to fundraise effectivelyMake brief but regular Facebook or Twitter posts about how your fundraiser is progressing toward your goal and what you’ve been doing to prepare for the program. In every post, ask for donations and include your fundraising webpage link. You might also want to include one of the photos from past Buds to Blossoms programs that touches you.

Once the volunteer program has begun, continue to provide your supporters with Facebook, Twitter, blog, mail or email updates. When you share your experiences, your supporters feel the impact of their help. You give them a chance to take this incredible journey with you and have their own heart-opening experience of service. Your updates may inspire them to donate again during or after the program.

Publicize your fundraising webpage

Seek support at your workplace

Follow up on pledges

Finish strong

How to fundraise effectivelyWhen you’re within sight of your goal but not quite there, people who’ve already invested in your success by donating once will be even more eager to see you cross the finish line. If you call attention to how far you’ve come, let people know you need their help now more than ever to reach your goal, and remind them why your fundraiser is important, some of your supporters will donate a second or even a third time, and new donors will come out of the woodwork.

Thank donors promptly

Have any questions? If you’d like advice on how to get started or need help along the way, contact us anytime.

How to fundraise effectively

The groundbreaking annual Fundraising Effectiveness Survey, a project of the AFP Foundation for Philanthropy, was piloted in November 2006 and collects fundraising data from nonprofit organizations beginning with data for 2004-2005. The Fundraising Effectiveness Survey enables participating groups to measure and compare their fundraising gain and loss ratios to those of similar organizations.

Participants can use this industry data, which AFP offers free, to make better-informed, growth-oriented budget decisions to boost donor revenue.

*Please note: A recent version of the Chrome browser may cause a small percentage of users to encounter an error message when completing the download form. If you experience this, our apologies – it is being addressed. In the meantime, please try to copy and paste this page link in a different browser or version of Chrome. Thank you!

The library consists of the following annual and quarterly reports on the growth and trends of philanthropy in North America:

  • 2021, Q4
  • 2021, Q3
  • 2021, Q2
  • 2021, Q1
  • 2020, Q4
  • 2020, Q3
  • 2020, Q2
  • 2020, Q1
  • 2019, Q4 Canada
  • 2019, Q4
  • 2019, Q3
  • 2019, Q2
  • 2019, Q1
  • 2018, Q4
  • 2018, Q3
  • 2018, Q2
  • 2018, Q1
  • 2017, Q4
  • 2017, Q3
  • 2017, Q2
  • 2019 Fundraising Effectiveness Survey Report
  • 2018Fundraising Effectiveness Survey Report
  • 2017 Fundraising Effectiveness Survey Report
  • 2016 Fundraising Effectiveness Survey Report
  • 2016 FEP Donor Retention Supplement
  • 2015 Fundraising Effectiveness Survey Report
  • 2015 FEP Donor Retention Supplement
  • 2014 Fundraising Effectiveness Survey Report]
  • 2013 Fundraising Effectiveness Survey Report
  • 2012 Fundraising Effectiveness Survey Report
  • 2012 Fundraising Effectiveness Factsheet
  • 2011 Fundraising Effectiveness Survey Report
  • 2011 FEP Donor Retention Supplement
  • 2010 Fundraising Effectiveness Survey Report
  • 2009 Fundraising Effectiveness Survey Report

Donor Software Workgroup

A critical element in the success of the Fundraising Effectiveness Project (FEP) has been the cooperation and support of the members of the AFP Donor Software Workgroup. Collectively, these firms serve more than 50,000 nonprofit clients.

In 2007, the Donor Software Workgroup assisted with the design of the FEP survey. The firms have developed software modules that eliminate the need for their clients to key the fundraising performance data manually into the survey instrument.

The FEP has developed a standard Gain/Loss Growth-in-Giving Performance Report for use by all nonprofits to measure their growth in giving, and most participating software firms have incorporated the FEP standard report into their reporting modules.

Your church or Christian ministry is growing. More people are coming every Sunday. Your ministry initiatives are expanding and bearing more fruit.

You might have outgrown your church space or your initial vision for your mission. So, now you want to undertake a capital project, like expanding your church building or launching new initiatives to reach more unreached people, maybe building a new school or hospital.

To turn capital projects like these into reality you need to launch a capital campaign.

By definition, a capital campaign is a focused initiative that can run over one or several years, aiming to raise a significant amount of money for a building project or for scaling up a Christian ministry’s operations.

Simply stated, if you are to expand your mission and increase your impact over time, you need to invest in growing your support base.

This is a significant step for your church or your ministry, which is why we are hosting a workshop on 7 September for helping church or ministry leaders like you to learn the basics of running a capital campaign.

Here are just three reasons, (and there are more), why you should attend this workshop if you are thinking about raising funds for a capital project for your church or ministry:

1. Fundraising for a capital campaign is different from doing stewardship in the local church or from fundraising for everyday activities.

Typically, a capital campaign focuses on raising funds from three sources: current and major donors, grant making trusts and the wider community of supporters (i.e. your congregation members, your ministry’s supporters, members of the local community).

The bulk of the money in a capital campaign comes from major gifts and many small contributions help to fill the gap. Learning how to get those significant contributions from current and potential major supporters will save you a lot of time and anxiety in the months to come.

At the upcoming workshop I will map out the different phases of the campaign and share plenty of biblical and practical tools and ideas on how to engage with high value supporters and philanthropists.

2. Capital campaigns are not for the faint hearted. To succeed they require a lot of work behind the scenes, focused attention, financial investment, fundraising expertise and energy.

In my role as a fundraising consultant to Christian charities and churches I have met many leaders who thought that preaching inspiring sermons or sending letters to their support base would rally major support for their projects.

Although sermons and speeches or letters have their place in the capital campaign process they are not the sole motivators for generating significant contributions needed over a period of time.

Therefore, before you are launching a fundraising campaign for a capital project it is necessary that you come to grips with:

  • The why and how to conduct a feasibility study that can determine whether your church or ministry can run a successful capital campaign;
  • How to create a campaign strategy with robust goals, a powerful campaign message and a case for support that can be used in discussions with major supporters and trusts;
  • What are the key qualities and skills needed from volunteers and a capital campaign team, including experienced campaign consultants and fundraisers;
  • The kind of budgets, systems, and activities you need to undertake to be successful, and much more.

3. Because supporters who can make significant contributions play such a major role in a capital campaign, you need to learn how to identify them and how to make the ask.

Over the last 18 years I have coached and prepared many church and Christian ministry leaders to ask and get significant contributions for their capital campaigns.

Learning what to share and how to ask is not difficult if you are open to receiving some training and instruction on this subject.

And this is exactly what I am going to offer at the upcoming workshop – during one of the sessions I will share with you some steps and ideas on how to present your capital campaign project to a new prospect or a current supporter, how to address any questions they might have and then invite them to join in what God is doing through your church or ministry.

In Summary:

  • Fundraising for capital projects is different from any other type of fundraising you might have undertaken before and needs to be carefully planned and implemented.
  • If your new building project or major ministry initiative really matters to you and your team, then you need to invest in learning how to reach your financial goals by running a successful capital campaign.
  • If you need help in in how to do this come along to our training – through Christian Fundraising Consultancy I have taught other church and ministry leaders like you to launch effective capital campaigns, and I can help you too.

Click here to book your ticket for ‘How to fundraise effectively for capital projects?’

6 reading guides

5 workshop guides to structure your team discussions and project

10 articles, case studies, and interviews

12 videos covering a range of topics

Section 1: An Entrepreneurial Approach to Funding Your Nonprofit

Reading: An Entrepreneurial Mindset and Diversified Funding Model

Reading: Building Authentic Relationships and Fundraising Without Fear

Reading: Fundraising Begins with Your Mission and Impact

Article: In Defense of Raising Money: A Manifesto for Nonprofit CEOs

Case Study: From Learn Origins, Buzz Women Seeks a Funding Model for Scale

Interview: Caren Wakoli, Founder of Emerging Leaders Foundation

Video: Sasha Dichter on the Fundraising Mindset

Videos: Taking an Entrepreneurial Approach and Building Authentic Relationships in Fundraising

Workshop Activity: Refine your organization’s mission statement and theory of change

Section 2: Funding Models and Diversification

Reading: The Benefits of Diversification and Funding Experimentation

Reading: Comparing Sources of Nonprofit Funding

Interview: Kathy Bergs, Chief Development Officer at Peace Parks Foundation

Case Study: Krupa Patel, Co-Founder of Anza

Case Study: For Youth Volunteering Network Bhumi, Volunteers are a Fundraising Asset

Videos: Sources of Funding and When to Say No to a Funding Opportunity

Workshop Activity: Evaluate your past approach to fundraising, research peer organizations, and select a funding source to pursue

Section 3: Budgets and Fundraising Goals

Reading: Understanding Your Organizational Budget

Reading: Communicating About Your Financial Health

Reading: Cost Allocation

Reading: Preparing a Grant Proposal Budget

Interview: Lynda Mansson, Director General of MAVA Foundation

Workshop Activity: Assess your organizational budget, identify your funding gaps, and set measurable fundraising goals

Section 4: Building a Community of Donors and Partners

Reading: Defining Your Value Proposition

Reading: Identifying Prospective Donors

Reading: Understanding a Donor’s Priorities and Motivations

Reading: Making the Ask

Reading: Stewarding the Relationship Over Time

Interview: Stephanie Speirs on Overcoming the Fear of Fundraising

Case Study: Shiksharth Learns How to Fundraise in Conflict-Affected Chhattisgarh

Videos: Tactics for Nonprofit Fundraising, Making Your Pitch, and Learning From Mistakes

Workshop Activity: Draft a donor persona and write a case for support

Section 5: Storytelling and Communications

Reading: Storytelling to Create Connection and Motivate Action

Reading: Building Your Communications Strategy

Reading: Evaluating Your Website

Case Study: Etnosfera on Crowdfunding Surprise in Rural Colombia

Workshop Activity: Building on all course sections, create your nonprofit’s fundraising plan

How to fundraise effectively

Cause Effective transforms nonprofits by partnering with mission-driven leaders to achieve social change. We work with leadership to develop, employ, and expand effective fundraising, governance and organizational strategies to advance equity and justice.

We envision a future in which nonprofits thrive with empowered leadership and abundant funding to achieve an equitable world.

How to fundraise effectively

Cause Effective has weathered many crises in partnership with nonprofits and is working with hundreds of groups to pivot their fundraising during this difficult time in our history. Read More

News & Notes

Cause Effective Client Spotlight: The Legacy of Resourcing Communities

As Black History Month comes to an end for 2022 and we launch into Women’s History Month, Cause Effective reflects on the complicated history of people of color and philanthropy. Inspired by the Madam C.J. Walker’s Gospel of Giving: Black Women’s Philanthropy during Jim Crow, Cause Effective will be dedicating space through our work to highlight our incredible clients. Most notably, we are reflecting on how they have been resourcing their communities. The rich history of identity-based philanthropy and fundraising, and female-led philanthropy, lives within these innovative, mission-driven, community centric organizations.

Celebrating the Nonprofit Sector at Year's End

Imagine the last year and a half – with all we’ve experienced living through this unprecedented pandemic. Now imagine every time you saw or heard about a nonprofit organization in action — providing emergency shelters, handing out groceries, pivoting to virtual learning, advocating for immigrant rights, and mental health care.
Can you imagine this period in time without the lifesaving and life-transforming services that these nonprofits provide every day to people throughout the world? The nonprofit sector is, indeed, the epitome of care.

The Power of Team: Year-End Fundraising

Around the country this is the time of year when nonprofit organizations send fundraising appeals to their donors – current, lapsed, and prospects – asking for financial support for their mission and work. For some organizations this is a stressful period of the year. The pressure of bringing money in the door, particularly during a time when millions of people are still living through the continued negative impact of COVID…people are experiencing an increasing rise in prices to cover some of the most basic household necessities…organizations, institutions and businesses are navigating tricky personnel and financial challenges – the reality is, we are still living with so many unknowns.

Transparency inspires confidence. Beyond what the law requires, nonprofits can demonstrate their commitment to ethical practices by being entirely transparent with financial information and fundraising practices.

  • Communications must be accurate and honest.
  • Honesty in communications includes providing attributions for images and photographs/video. Only use images of people with prior permission, and never include information with images of minors that could be considered personal identifying information.
  • A fundamental financial transparency practice is to make it easy for visitors to a nonprofit’s website to find information about the nonprofit’s budget-size and its sources of revenue, as well as information about board composition, programs, outcomes/impact, staffing, and donors (protecting the identity of those who wish to remain anonymous).
  • Remember that fundraising is regulated by state laws.
  • There are certain documents that tax-exempt nonprofits MUST make available to the public. (Learn about the public disclosure requirement.) Among them is a notice that must be provided by organizations that are tax-exempt, but NOT a public charity, in connection with solicitations.

What are other ethical fundraising practices, and what practices are NOT ethical? The Association of Fundraising Professionals “AFP” and the National Council of Nonprofits agree: compensating fundraisers with a commission on contributions is not ethical. (See below) For similar reasons, placing undue pressure on potential donors to donate does the entire charitable nonprofit community a disservice. Some reports (such as this one) express concern that high-pressure tactics employed by some out-sourced fundraising services are creating a back-lash against charitable giving.

Accountability to donors

Practices that demonstrate accountability and respect for donors include:

  • Sending timely gift acknowledgements
  • Respecting restrictions on donors’ gifts
  • Disclosing to the public what the law requires
  • Providing timely reports to foundations, and/or government funding sources, as applicable
  • Listing donors on a nonprofits’ website in the manner in which the donor would like to be acknowledged

Anonymous donors

Some donors ask that their gift remain anonymous, and are concerned that the nonprofit will sell their contact information to other nonprofits (which will increase the chance that they will be solicited by other nonprofits).

  • To address these concerns, the Association of Fundraising Professionals (AFP) has developed a Donors’ Bill of Rights that nonprofits are encouraged to adopt.

Acknowledging donations

Donors expect a ‘thank you’ note to acknowledge their charitable gifts. It is not only ethical to be transparent with donors about the receipt of their gifts, but it is also a legal requirement for certain gifts.

  • Read the National Council of Nonprofits’ Tip Sheet on Saying Thank You to Donors.
  • IRS resources explain what a written gift acknowledgement should include and when one is required.
  • Review IRS Publication 1771, Charitable Contributions, Substantiation and Disclosure Requirements.
  • Read about the IRS requirements for acknowledging “quid pro quo contributions” (gifts of $75 or more when the donor receives something of value in return.)

Respecting donor intent

Respecting a donor’s intent is an ethical issue and also a legal matter that starts with educating staff and board members about the importance of maintaining donor trust, and the legal/fiduciary obligation to honor donors’ requests.

  • But also make sure all staff and board members understand the significance of “restricted” gifts and that saying “no” to restrictions (tactfully) is sometimes the wiser response: Nonprofit gifts: When strings are attached (Nolo)
  • Manage donors’ expectations about what the nonprofit will or will not accept. Example: “We are grateful for in-kind contributions that will help us deliver services to seniors, however, we do not accept contributions of used computers.”
  • A verbal agreement between a donor and a charity to use the gift in a certain way can be enforceable. When donors provide a contribution for a specific purpose this is referred to as a “restricted gift.”
  • Clarifying how a contribution will or will not be used and respecting a donor’s intention about the use of a gift, or how the donor will be recognized (such as a request to remain anonymous), is a basic tenet of ethical fundraising and accountability.
  • Using a written agreement can help define how a gift will be used, and manage potential donors’ expectations about what gifts a charitable nonprofit will – and will not accept.
    • Learn about using gift acceptance policies.
    • Learn more from the Council of Nonprofits’ resources on fundraising.

    “Can we pay our fundraiser a commission?”

    It is NOT appropriate for a nonprofit to compensate a fundraising professional based on a percentage of the money raised.

    • See Standard #21 of the AFP Code of Ethical Principles and Standards for professional fundraisers.
    • Example: Code of Ethics/Fundraising. See Section V of the Pennsylvania Association of Nonprofit Organizations’ (PANO) Code of Ethics which is one standard contained in the Standards for Excellence for Pennsylvania nonprofits.

    Transparency about Fundraising Costs

    As a matter of being a sustainable organization, nonprofits should know what it costs to operate their programs and activities. Fundraising is an activity that has a cost, too. In fact, the annual return (IRS Form 990) asks tax-exempt organizations to put a dollar figure on the annual cost of fundraising activities. The IRS defines fundraising expenses as: “..the expenses incurred in soliciting contributions, gifts, and grants.”

    • The IRS instructs nonprofits to: “Report as fundraising expenses all expenses, including allocable overhead costs, incurred in: (a) publicizing and conducting fundraising campaigns, and (b) soliciting bequests and grants from foundations or other organizations…” (Source: Instructions to Form 990, page 35).
    • Nonprofits should not be uncomfortable reporting these costs – Instead we should own our own costs, and help those that support our mission understand what it costs to deliver that mission!

    Examples of fundraising expenses include: postage and printing, telephone and internet charges, relating to sending letters/emails to ask for contributions; staff time spent writing grant proposals and other costs relating to applying for or renewing grants, and reporting on grants received; maintaining relationships with funding sources; costs of special events that result in contributions; the development of fundraising materials and their distribution, such as annual reports; as well as costs incurred in collecting contributions; and all indirect costs of the above (especially salaries and benefits of related personnel).

    Misstating a nonprofit’s fundraising expenses is dishonest and contributes to the “overhead myth” and the “Nonprofit Starvation Cycle.”