Principles for Responsible Fundraising

Nonprofits and charitable organizations rely on donors and fundraising to drive programs, serve their mission and stay focused on serving their core constituents. Ensuring that the fundraising process is optimized and provides donors with proper guidance and needed information is essential. This encourages repeat donations and maintains clarity and transparency with the general public. To help organizations establish fundraising policies and procedures, a guide was created with a comprehensive set of principles that, when followed, help maintain ethical and trustworthy behavior. To help our nonprofit clients, prospects and others, Wilson Lewis has provided a summary of key fundraising principles below.

Effective Fundraising Principles

  • A charitable organization must make a variety of information clear to donors when soliciting donations, including who is requesting the donation and where and how the donation will be used. The donor has a right to know the name and location of the organization receiving the donation, description of its mission and related activities, intended use of funds, additional contacts and whether the person doing the fundraising is a paid employee or volunteer. To keep donors educated with this information, it’s important that organizations ensure their online, mobile and print communications contain accurate information.
  • The intent of the donor needs to be honored, so donations should be allocated and used accordingly. It’s important to ensure that solicitation materials indicate whether the funds will be used for a general or specific purpose. The organization should be comfortable with the special requests of the donor and clearly communicate any changes to how the funds will be used prior to concluding the transaction. In the case of substantial donations, it’s important to have a policy in place that allows management to change the use of an asset as need and priority dictate.
  • A charitable organization must acknowledge a donor’s contribution as part of IRS regulations. It’s important for organizations to develop a process for acknowledging all contributions made in a timely manner regardless of how they are received. Remember, donors must have written acknowledgement to claim a tax deduction on their tax return for any contribution over $250. In some cases, organizations are required to make a good faith estimate on the value of goods donated. Providing donors with the documentation they need to claim the deduction on their income tax return in a timely manner will ensure they receive the full benefit afforded them.
  • A formal gift acceptance policy should be created to protect both the donor and the organization in cases when accepting a gift would compromise the organization’s ethics, financial circumstances, program focus or other interests – whether intended or not. Moreover, there could be significant tax consequences if the organization is not able to utilize certain gifts in an established period of time. The policy needs to be clear about the terms of relationships and sponsorship offers from businesses and others to ensure there are no miscommunications between the parties regarding payments, tax consequences and other matters.
  • Maintaining the privacy of donor information is essential to growing a consistent pipeline of funds. It’s important to ensure that such information is handled with respect and kept confidential to the maximum extent permitted by law. Let donors know if their names will be used for future fundraising, if the information will be sold or shared and how they can “opt out” of future communications. It’s best practice to ensure that all donors are sent an annual notice to allow them to request that their names and contact information be removed from marketing and other communication lists.

Contact Us

Fundraising is an essential function that maintains the vitality of charitable organizations. Ensuring that there is adequate communication and clear policies and safeguards in place will ensure donors are educated, that funds are used as intended and that both the donors and organization are protected. To learn more, the full guide can be found at PrinciplesForGood.com. For additional information about nonprofit management or for assistance with your next audit, Wilson Lewis can help! For additional information please call us at 770-476-1004, or click here to contact us. We look forward to speaking with you soon.