I am a baby boomer in my mid-70s who is passionate about supporting nonprofits that help low-income young people thrive in their education. Pitch me if you run a successful one. Eventually, most of my estate will go to organizations that do that work effectively. I have given initial donations of $1,000 to $5,000 to see how the organizations respond. I expect them to promptly acknowledge my gift, then explain how it’s being used.
I have been surprised and disappointed by their responses — or lack thereof. With new data from Giving USA showing a historic drop in donations to charities, I believe more nonprofits need to listen to what individual donors like me say they need.
For example, one of the organizations I support received a multimillion-dollar donation from MacKenzie Scott. I expected some information about the award and how the organization would use it. I wanted to know if I should redirect or reduce my contribution to ensure it did the most good or went where the need was greater, but nothing materialized. I contacted the director but never heard back.
Six months later, I shared my disappointment with the director and said I would temporarily stop donating. That led to a discussion about the reasons for the delay, why it was important to share this information with donors, and a resumption of my support. Had I not followed up, I would have likely stopped donating.
Seven months ago, I asked another organization for additional clarity about where money from my estate might eventually go and included a donation for immediate use. I am still waiting for that requested information. And at a nonprofit that helps low-income individuals cope with their bills, I asked for more information about counties served and the type of aid provided. No response. I have had similar experiences at other organizations.
Collectively, these nonprofits have lost about $20,000 in annual gifts and $100,000 in estate allocations from me because of their inadequate responses.
Many people my age want to both make a difference with their donations and receive responses showing where their money is going. We want to support successful organizations and see proof that our support has contributed to success. I search for nonprofits with a clear mission tied to my goal, demonstrated effectiveness within that mission, and transparency about where they’ll direct donations.
My experience shows that organizations eagerly receive donors’ funds but are slow to respond. Here’s how they can improve their approaches to donors.
Focus on many gifts instead of, or in addition to, the megagifts. Fundraisers spend a lot of time and money searching for potential donors with the capacity to make large contributions. But other types of donors matter, too. Political fundraising shows that many small gifts can make up a bigger portion of funds and engender a broader base of long-term support than a few large gifts. Nonprofit fundraisers need to learn that lesson.
Focus on the long game. Fundraisers concentrate their efforts on how much they raise in a particular year, but future giving also matters. Many baby-boomer donors use your responses to inquiries and smaller donations to help them plan eventual estate gifts, as I am doing. Keep in touch with them. Invite donors to your office to meet staff and clients. Even if they don’t donate for a year or two, keep sending updates about the impact of their money.
Get to know your donors. Find out about their lives, their backgrounds, and what drives their passion. Do more listening than talking. Donors who give $1,000 now might give $10,000 in the future if you connect to their deepest philanthropic desires. For example, after talking to development staff at my favorite local theater about donating, I learned they have programs teaching low-income students to write plays, some of which are presented in the theater. I agreed to donate because it connected to my desire to help young people in need.
Respond promptly. Most of the donation receipts I get take at least a month to arrive, and some take more than two months. Acknowledge the gift by email the day it’s received, so donors don’t worry about post-office delays. The official receipts can come later.
Along with a donation to an organization addressing hunger, I included a handwritten note saying I wanted to visit its office. I didn’t hear back for a month, until I needed to ask for a receipt for tax purposes. I received the receipt but nothing about my request.
On the other end of the spectrum, the director of one organization I support calls upon receipt of my donation to express her appreciation. A prompt response shows you value not only the donation but also the donor’s interest and may even encourage further gifts.
Issue correct, detailed receipts. One organization gave me a free membership in response to a donation I’d sent from my individual retirement account, known as a qualified charitable distribution, or QCD. I rejected the offer, but the resulting receipt failed to acknowledge that no goods or services were offered in exchange for my donation. Another noted that my receipt represented my donation minus the cost of goods or services received, which could suggest that I did receive such gifts.
When a donation doesn’t come from an IRA, donors can exclude the value of rewards and still claim the balance as a charitable deduction. But if an IRA donor accepts a reward for their contribution, it’s no longer eligible as a QCD.
With this in mind, all receipts must include the following: the organization’s name, the amount and date of the gift, and whether any goods or services were given. They should also state that the organization is a qualified 501(c)(3) and the check came directly from a financial institution, since a QCD donor might be subject to additional scrutiny from the IRS.
Limit, or find alternatives, for galas. Galas have their place but tend to highlight the social divide between your donors and clients. I have been invited to galas at yacht clubs with $300 tickets, where the very wealthy can solidify their status and you never see clients. I declined. I have never been invited to a hot-dog or ice-cream social at the park where donors can meet staff and clients. Galas communicate a message of exclusivity that does not resonate with ordinary people considering your organization for their estate plans.
Be transparent about where donations go. Donors want to hear how their funds will be used. Share immediate plans for the donation when it’s received, and later explain where it ended up and the impact it had. This might include information such as the number of meals delivered, types of assistance provided, how many schools received funding, and more. If your organization runs a matching campaign, tell donors how much was received and matched after it ends. Finally, send yearly reports on how the organizations used the donor’s funds.
I fund several college scholarships for low-income students. I want to know who received the scholarships and the amounts. I don’t want my donation to displace financial aid that the college would have already given. I’d rather my money provided additional aid beyond what the school allots, and I’ll donate more to scholarships that do that. I cannot, however, make that decision if the colleges don’t supply the relevant data.
Transparency matters. If organizations want to maintain relationships with their donors and encourage further gifts, they need to listen, ask questions, and respond to donors’ needs. Only then can they effectively work together for the greater good.
