Day: November 21, 2024

As the nonprofit sector continues to evolve, staying informed about emerging trends is crucial for adapting strategies and optimizing fundraising efforts. This article provides a comprehensive overview of the key trends shaping fundraising in 2024 and beyond.

1.) Economic Challenges and Opportunities

Impact of Inflation and Growing Competition

In recent years, inflation has significantly impacted charitable giving. In 2022, Americans donated $319.04 billion, a decrease from previous years. Although individual donors contributed an estimated $374.40 billion in 2023—representing 67% of the $557.16 billion total giving—this reflects only a 1.9% increase from 2022. However, when adjusted for inflation, total giving actually declined by 2.1%. Major donor contributions decreased by 10%, highlighting the need for nonprofits to diversify their donor bases and adapt their fundraising strategies.

Despite these challenges, researchers project a rebound, with giving expected to increase by 4.2% in 2024 and 3.9% in 2025. This anticipated growth presents an opportunity for nonprofits to refine their approaches and leverage the expected rise in charitable contributions.

2.) Technological Advancements in Fundraising

Artificial Intelligence and Machine Learning

Artificial intelligence (AI) and machine learning are increasingly transforming the nonprofit sector. AI is used for donor segmentation, predictive modeling, and enhancing fundraising strategies, aiming to optimize donor engagement and reduce costs. However, organizations must balance AI’s efficiencies with the need for personal interaction to avoid alienating donors.

Automation Tools

Automation tools are streamlining operations, from online donations to event planning and data analysis. These tools save time and resources but require human oversight to ensure accuracy and maintain the personal touch in donor communications.

Generative AI

Generative AI is advancing in content creation, data analysis, and donor segmentation. This technology helps tailor fundraising appeals to individual donor preferences, enhancing engagement and effectiveness. However, data security and alignment with organizational needs remain critical considerations.

3.) Shifting Donor Engagement Strategies

Diversifying Donor Bases

A trend in 2024 is the shift from major donor reliance to focusing on mid-level and monthly donors. Dana Snyder of the “Missions to Movements” podcast emphasizes the importance of diversifying donor engagement. Organizations should enhance their efforts to attract and retain monthly donors, especially as younger generations increasingly prefer consistent, smaller contributions.

Relationship-Centric Fundraising

Relationship-centric fundraising is gaining prominence as nonprofits prioritize genuine connections with donors. Sabrina Walker-Hernandez of Supporting World Hope advocates for focusing on relationships rather than transactions. By fostering authentic engagement, nonprofits can strengthen donor loyalty and improve fundraising success.

Innovation in Donor Engagement

Retaining donors is crucial for long-term success. Lynne Wester of The Donor Relations Group highlights the importance of continuous engagement through meaningful communication and appreciation. Effective donor retention involves providing personalized updates on the impact of contributions and maintaining ongoing engagement.

Preparing for Wealth Transference

Over the next 20 to 30 years, America will see the largest level of wealth transference it has ever seen. It is expected that some $11.8 trillion will find its way to nonprofit organizations as the silent generation and the baby boomers pass on their amassed wealth. It is important for nonprofit organizations to open up communication with both their older donors, who will be transferring this wealth and their middle-aged and younger donors, who will be inheriting this wealth. This will come down to developing and strengthening relationships. With the top unified credit limit (the amount that a taxpayer can pass on to their heirs) decreasing in 2026 from $14 million to $7 million (barring a change in the tax code), including nonprofits in estate planning discussions is expected to increase.

4.) Social Media and Generational Shifts

Email Marketing Trends

Email marketing continues to be a significant tool for nonprofits, though its effectiveness is fluctuating. In 2023, nonprofits raised $76 for every 1,000 emails sent, a 15.56% decrease from $90 in 2022. Response rates to fundraising emails declined by 10% for advocacy emails and 16% for fundraising emails. Despite these declines, the number of subscribers on nonprofit email lists increased by 7%. On average, nonprofits send 59 emails per subscriber annually, with 27 being fundraising appeals. Email communications sent regularly are most likely to encourage repeat donations, with 48% of donors reporting regular email communications keep them engaged. Nonprofits should also consider that 55% of U.S. donors prefer to be thanked via email.

Social Media Utilization

Social media remains a critical platform for fundraising. Approximately 99% of nonprofits use Facebook, 96% use Instagram, and 88% use Twitter/X. Nonprofits post frequently across these platforms, with Facebook seeing an average of 5.95 posts per week and Instagram 4.9 posts. Content that evokes a joyful emotional response tends to be the most widely shared. Social media is also a significant driver of online donations, with 32% of donors reporting that social media inspired their contributions. Nonprofits should be aware of the varied effectiveness of different platforms; 23% of marketers see Instagram as the top platform for growth, followed by TikTok (19%), Facebook (18%), and others.

5.) Generational Dynamics and Donor Preferences

Millennial Donors

Millennial donors prioritize making a difference and actively track the results of their donations, with two-thirds tracking outcomes compared to one-third of baby boomers. Mid-level donors are particularly loyal, with 52% giving to the same cause for over a decade. Additionally, 31% have made a bequest, and 23% are in the process of doing so.

Major and Mid-Level Donors

Major donors remain impactful, contributing approximately 88% of total dollars raised despite constituting just 12% of donors. Location and income are also significant factors in giving, with about 80% of donors supporting local organizations and households with incomes of $250,000 or higher being more likely to donate.

Overall Giving Trends

Educational institutions, foundations, and public-society organizations have seen the highest increases in giving. However, giving by individuals has decreased by 17.2%. Response rates to peer-to-peer campaigns and crowdfunding campaigns also reveal a trend toward new donor engagement.

As we wrap up 2024 and move into 2025, nonprofits face both challenges and opportunities. By adapting to economic shifts, leveraging technological advancements, diversifying donor engagement strategies, utilizing social media effectively, and understanding generational dynamics, organizations can enhance their fundraising efforts and achieve greater success.

This article was featured in our 2024 Fundraising Guide. View the updated guide and more related topics here!

Kenneth R. Cerini, CPA, CFP, FABFA

Managing Partner

Ken is the Managing Partner of Cerini & Associates, LLP and is the executive responsible for the administration of our not-for-profit and educational provider practice groups. In addition to his extensive audit experience, Ken has been directly involved in providing consulting services for nonprofits and educational facilities of all sizes throughout New York State in such areas as cost reporting, financial analysis, Medicaid compliance, government audit representation, rate maximization, board training, budgeting and forecasting, and more.

Giving Tuesday, the global day dedicated to charitable giving, is fast approaching on December 3, 2024. As one of the most significant fundraising opportunities of the year, it offers nonprofits a powerful platform to boost visibility and secure vital donations. Whether you’re aiming to meet end-of-year fundraising goals or launch a specific project, preparing for Giving Tuesday is essential. Here’s how your organization can make the most of this day of global generosity.

What is Giving Tuesday?

Giving Tuesday began in 2012 as a response to the consumerism of Black Friday and Cyber Monday. Founded by the 92nd Street Y in New York, in partnership with the United Nations Foundation, it aimed to capture the spirit of generosity during the holiday season. Since its inception, it has grown into a worldwide movement, with more than 85 countries participating. In 2021, U.S. donors alone contributed $2.7 billion, and in 2023, the movement celebrated its 10th anniversary by raising over $3.1 billion globally.

Why is Giving Tuesday Important for Your Nonprofit?

Giving Tuesday is more than just a day—it’s an opportunity to engage with donors, raise awareness for your cause, and meet critical fundraising goals. It’s also a chance to connect with a global community dedicated to philanthropy. By participating in Giving Tuesday, your nonprofit can amplify its message, build lasting relationships with supporters, and leverage the momentum to sustain year-end giving efforts.

Preparing for Giving Tuesday 2024: Key Strategies

1.) Conceptualize Your Campaign

Your Giving Tuesday campaign should stand out in the crowded landscape of nonprofit fundraising. Start by getting creative with your campaign concept. What unique story can you tell? How does this campaign differ from your other fundraising efforts? Research successful campaigns from similar organizations and tailor these strategies to your nonprofit’s mission. The key is to be innovative and authentic, ensuring your message resonates with your audience.

2.) Leverage Gift Matching

Gift matching is one of the most effective ways to double your impact on Giving Tuesday. Reach out to corporate partners, both large and small, to see if they are willing to match donations. This not only increases the total amount raised but also incentivizes donors to give more. According to a survey by Double the Donation, 84% of donors are more likely to contribute if their gift is matched. Encourage your supporters to check if their employers offer matching programs to maximize contributions.

3.) Assemble Your Dream Team

A successful Giving Tuesday campaign requires a dedicated team. Bring together individuals with diverse skills—creative thinkers, social media experts, seasoned marketers, and passionate advocates for your cause. This mix of talents will ensure your campaign is dynamic, engaging, and effective. After Giving Tuesday, debrief with your team to identify what worked and how to improve for future campaigns.

4.) Choose the Right Platforms

Deciding where to focus your efforts is crucial. While social media is the driving force behind Giving Tuesday, different platforms have different strengths. Facebook is ideal for peer-to-peer fundraisers, Twitter excels in real-time interaction, Instagram is perfect for visual storytelling, and TikTok can engage younger audiences with creative video content. Analyze your past campaigns to determine where your audience is most active and tailor your strategy accordingly.

5.) Set SMART Goals

Setting clear, measurable goals is key to a successful Giving Tuesday campaign. Your goals should be Specific, Measurable, Achievable, Relevant, and Time-bound (SMART). For example, instead of simply aiming to “raise money,” set a specific target such as “raise $50,000 by December 3rd for our new educational program.” SMART goals help keep your campaign focused and provide a clear benchmark for success.

6.) Measure Your Success

Tracking the success of your campaign is crucial for future planning. Use tools like Google Analytics to gather data on donor demographics, social media engagement, website traffic, and donation patterns. This data will help you understand what strategies were most effective and where there is room for improvement. Analyzing your performance will also provide valuable insights for your year-end fundraising and beyond.

7.) Build a Workback Schedule and Content Calendar

Planning is everything when it comes to a successful Giving Tuesday campaign. Create a workback schedule that outlines key milestones leading up to the event. Develop a content calendar for your social media posts, email campaigns, and other communications to ensure your messaging is consistent and timely. Regular updates, such as fundraising milestones, can build momentum and keep your supporters engaged throughout the campaign.

8.) Craft Compelling Messaging

Your messaging should be clear, concise, and compelling. Start by answering the basics: Who are you? What are you raising funds for? What impact will donations have? Stay focused on your central message to avoid overwhelming your audience. Whether through email, social media, or your website, ensure that your communication is aligned with your overall campaign goals.

9.) Design Eye-Catching Visuals

Strong visuals are essential for grabbing attention on crowded social media feeds. Use images that convey the impact of donations, such as photos of beneficiaries or community events. Include the Giving Tuesday logo in your designs and create branded graphics that supporters can share. Visuals not only enhance your campaign’s appeal but also make it easy for your audience to connect with your message quickly.

10.) Optimize Your Donation Page

Make it easy for donors to give by creating a dedicated Giving Tuesday donation page. Ensure that the page is user-friendly, mobile-optimized, and clearly states the impact of donations. Include options for recurring gifts to encourage long-term support. A well-designed donation page can significantly increase conversions and overall fundraising success.

Giving Tuesday Benefits for Donors:

• A Sense of Purpose: Donors are fulfilled when they contribute to causes they feel passionate about and become part of the change they want to see.
• More Impact: Between donation match opportunities and simple ways to donate, Giving Tuesday offers donors a way to see their donation go even further.
• Belonging and Community: Giving Tuesday brings people together, fostering new connections and a shared purpose among supporters and volunteers.
• An Easy Way to Find New Causes: The viral nature of #GivingTuesday on social media can help donors connect to new causes, organizations, and individuals fundraising for reasons they resonate with.
• Tax Benefits: Year-end contributions on Giving Tuesday often lead to tax breaks and deductions for many people filing in the new year.

Giving Tuesday Benefits for Nonprofits:

• High Visibility: Through their Giving Tuesday campaigns and engagement around the big day, nonprofits can reach more donors with a direct way to take action.
• Potential to Raise More: When donors are already in the mindset of giving, they are more likely to contribute generously, leading to higher fundraising totals.
• A Loyal Community: As employees, volunteers, beneficiaries, and donors connect on Giving Tuesday, their passion for a cause can expand into year-round loyalty and recurring donations.
• A Way to Test New Ideas: Giving Tuesday is an opportunity to get creative with your theme and campaign ideas. Nonprofits can learn what resonates with their donor base through supporter feedback and social media engagement.
• Fuel for Year-End Giving: Relationships formed on Giving Tuesday can become a valuable audience for year-end fundraising campaigns and holiday giving opportunities, helping nonprofits reach their annual goals.

Giving Tuesday 2024 is a pivotal moment for nonprofits to rally support, raise crucial funds, and make a lasting impact. By following these strategies, your organization can maximize its success on this global day of giving. Start planning now, build a strong campaign, and watch as your efforts contribute to the spirit of generosity that defines Giving Tuesday.

This article was featured in our 2024 Fundraising Guide. View the updated guide and more related topics here!

Lauren Grandinetti, CPA

Manager

Lauren has been a member of Cerini & Associates’ audit and consulting practice area since 2012 where she focuses on serving nonprofit, healthcare, employee benefit plan, and education clients. Lauren has experience performing assurance work, outsourced accounting work, and government filings. Lauren brings her expertise, diversified background, and helpful approach to all of her engagements.

In the realm of nonprofit organizations, comprehending the diverse characteristics of your donors is paramount for cultivating a sustainable and thriving support base. Each generation comes with distinct preferences, communication styles, and viewpoints. To ensure your nonprofit’s success, it’s crucial to customize your outreach strategies to resonate with the unique traits of each generation.

The Silent Generation (Ages 79-96):
Honoring Traditions and Personal Connections

Born between 1928 and 1945, the Silent Generation experienced the Great Depression and World War II. Despite their shrinking numbers, they remain the most generous per capita donors and actively support multiple charities. To effectively engage this generation:

• Direct Mail: Traditional outreach methods like direct mail strongly resonate with the Silent Generation. An astonishing 88% of this cohort responds positively to appeals via direct mail. Utilize personalized donation letters to establish a sense of connection and familiarity.
• Physical Checks: A majority of this generation prefers donating through physical checks. Remarkably, 72% of the Silent Generation chooses this method. Offering options for check-based donations maintains their sense of comfort and familiarity.
• Phone Calls: Phone calls continue to be a fruitful means of engagement. Surprisingly, 66% of this generation responds to phone-based appeals. They show more responsiveness to this outreach method compared to most younger generations.
• Planned Giving: Since many of them are retirees, planned giving is an ideal approach. Cultivating one-on-one relationships is key, as they highly value personal connections. A significant proportion of their resources flow through planned giving.

Donation Stats

• 88% give to charity, donating an annual average of $1,367 across 6.2 organizations
• 11.8% of the US population and account for 26% of total US giving

Baby Boomers (Ages 60-78):
Engaging Through Personalization and Appreciation

Born between 1946 and 1964, baby boomers are responsible for a significant portion of donations. Their commitment to causes makes them valuable supporters. Tailor your outreach as follows:

• Email Appeals: Baby boomers respond well to personalized, targeted emails. Craft individualized messages that cater to their preferences for unique communication.
• Online Donations: Despite being comfortable with technology, baby boomers still value online donations. Easy-to-use forms enhance their giving experience.
• Thanking and Recognition: Acknowledge baby boomers’ contributions and their role in transformative historical movements. Appreciation strengthens their loyalty and encourages further support. Let them know how their funds are being used and keep them engaged in your organization.

Donation Stats

• 72% give to charity, donating an annual average of $1,212 across an average of 4.5 organizations
• 23.6% of the US population, but account for 43% of total US giving*

Generation X (Ages 48-59):
Embracing Technology and Empowerment

Generation X, born between 1965 and 1976, displays resourcefulness and a willingness to donate time and money. Engage with them through:

• Social Media Fundraising: Leverage social media for peer-to-peer fundraisers, tapping into Gen X’s familiarity with platforms like Facebook.
• Transparency: Gen X values transparent communication. They want to know what is being done with their contributions.
• Volunteer Opportunities: Highlight volunteer opportunities, aligning with Gen X’s high volunteer rates. Easy access to information can motivate them to contribute their time. This is important as individuals that donate their time also donate money at a higher rate.

Donation Stats

• Average annual gift of $732 across four charities.
• Lead in annual volunteer hours served.
• 20.4% of the US population and account for 22% of giving in the US

Millennials (Ages 29-47):
Advocacy and Digital Engagement

Born between 1977 and 1995, millennials are engaged advocates who leverage their online presence for social causes. Connect with them through:

• Social Media Engagement: Millennials value social media for advocacy. Create engaging content and encourage them to share your mission.
• Trust and Transparency: Gain their trust by communicating your organization’s goals transparently.
• Recognition and Leadership: Recognize millennials’ contributions and showcase how their support drives change. Highlight their leadership potential within your cause.
• Emerging Trends: Millennial Giving and Beyond A significant trend that has emerged is the substantial increase in giving by millennials. According to a report from the Giving USA Foundation, average annual household giving by millennials increased by 40 percent between 2016 and 2022. This rise underscores the growing economic security among millennials, enabling them to make more substantial donations.

Donation Stats

• 84% give to charity, donating an annual average of $481 across 3.3 organizations**
• 25.9% of US population but account for only 11% of giving in the US*

Generation Z (Ages 12-28):
Tech-Savvy and Socially Conscious

Generation Z, born between 1996 and 2012, is a digitally native and socially conscious generation that is beginning to make its mark on charitable giving. With their upbringing in the era of smartphones and social media, Gen Z is uniquely positioned to engage with nonprofits through technology-driven approaches. Here’s how you can effectively engage them:

• Tech-Forward Outreach: Embrace technology-driven approaches like text-to-give to cater to their preference for virtual experiences. Gen Z is comfortable navigating digital platforms and responding to online appeals.
• Environmental Focus: Highlight your organization’s efforts toward environmental causes, as Gen Z places a strong emphasis on sustainability and environmental initiatives. Demonstrating your commitment to these causes can resonate with their values.
• Transparency and Authenticity: Gen Z values honesty and transparency. To engage them, showcase your organization’s genuine commitment to social good. Clearly communicate how their contributions are making a difference. Show your impact.
• Emerging Trends: Insights into Generation Z’s Giving
  • Prioritizing Environmental Causes: Generation Z stands out as the only generation that prioritizes giving to environmental causes over faith-based organizations. Highlight your organization’s dedication to environmental initiatives to capture their attention.
  • Tech-Savvy Engagement: With a strong familiarity with digital platforms, Generation Z is more likely to participate in virtual events, online charity streams, and challenges. Utilize technology-driven strategies to engage them effectively.
  • Monthly Giving Preference: Generation Z is the most motivated generation to give on a monthly basis. They are accustomed to subscription-based models and are likely to embrace recurring giving campaigns.
  • Impact of Social Media: Gen Z is heavily influenced by what they see on social media. Messages and images shared on these platforms can inspire them to donate. Craft compelling content that resonates with their values.

Donation Stats

• Prefer smaller, grassroots causes and organizations.
• Donate their time and spread the word on social media.
• 59% of Gen Zs are inspired to donate to charity by a message/image they saw on social media

As Generation Z continues to mature and become financially independent, their impact on charitable giving is expected to grow. Nonprofits that adapt their strategies to align with Gen Z’s preferences for digital engagement, environmental causes, and transparent communication will be well-positioned to capture the support of this emerging generation of donors. Understanding and embracing the unique traits of each generation, including Gen Z, will pave the way for a more inclusive and impactful philanthropic landscape.

Every generation has its distinct traits and preferences, which influence their engagement with nonprofit causes. By understanding these characteristics and adapting your outreach strategies accordingly, your nonprofit can foster meaningful connections, cultivate loyal supporters, and secure a brighter future for your cause. Embrace the diversity of your donor base, tailor your approach, and continue building bridges that connect generations through philanthropy.

This article was featured in our 2024 Fundraising Guide. View the updated guide and more related topics here!

Mahnaz Cavalluzzi, CPA

Director

Mahnaz has been a member of Cerini & Associates’ audit and consulting practice area for over 8 years where she focuses on serving nonprofit organizations, education, and healthcare clientele. Mahnaz has experience in financial statement audits, financial statement reviews, tax return preparation, cost report filing, and other consulting. Mahnaz brings her expertise, diversified background, and helpful approach to all of her engagements.

The upcoming generational wealth transfer is poised to be the largest in history, with an estimated $84.4 trillion set to be passed down from the Baby Boomer generation over the next two decades. Approximately $11.8 trillion of this wealth is expected to flow into the nonprofit sector, presenting an unprecedented opportunity for organizations to bolster their philanthropic resources.

Why This Wealth Transfer Matters

This monumental transfer of wealth represents a critical juncture for the nonprofit sector. Baby Boomers, born between 1946 and 1964, have accumulated substantial wealth over their lifetimes, with average net worths ranging from $970,000 to $1.2 million. As this wealth transitions to younger generations, particularly Millennials, the philanthropic landscape is expected to evolve. For nonprofits, this wealth transfer is not just a chance to receive donations but a pivotal opportunity to secure their financial future and expand their impact.

Ensuring Nonprofits Receive Their Share of the Wealth

To capitalize on this wealth transfer, nonprofits must implement strategic approaches that resonate with both Baby Boomers and the generations inheriting their wealth. Here are key strategies nonprofits can adopt to ensure they receive a portion of these donations:

1.) Enhance Planned Giving Programs

Planned giving is one of the most effective ways for nonprofits to secure a portion of this wealth transfer. With 90% of planned gifts being bequests, nonprofits should focus on making planned giving accessible and appealing. This can be achieved by simplifying the process, providing clear and concise information, and sharing compelling stories of how planned gifts have made a difference. By educating donors about the long-term impact of their contributions, nonprofits can encourage more bequests.

2.) Tailor Engagement Strategies to Generational Preferences

Different generations have varying philanthropic behaviors and expectations. For instance:

• Generation X values pragmatism and independence, often preferring digital platforms for giving and supporting causes that directly impact their communities.
• Millennials seek transparency, social impact, and alignment of causes with their personal values. They are more likely to engage with nonprofits that demonstrate a clear, measurable impact.

Nonprofits must tailor their engagement strategies to meet these generational preferences, using diverse giving channels and leveraging technology to enhance the donor experience.

3.) Engage Women as Philanthropic Leaders

With women projected to control two-thirds of U.S. wealth by 2030, and already exerting significant influence over charitable decisions, nonprofits must prioritize engaging women in their fundraising efforts. This can be done by designing programs and communications that resonate with their specific philanthropic motivations, such as supporting causes related to education, healthcare, and social justice.

4.) Leverage Technology and Innovation in Fundraising

As digital engagement continues to grow in importance across all generations, nonprofits should integrate advanced technological tools into their fundraising strategies. This includes offering mobile giving options, utilizing social media for campaigns, and employing data analytics to personalize donor experiences. A tech-savvy approach not only attracts younger donors but also streamlines the donation process, making it easier for all donors to contribute.

The Importance of Engaging Younger Donors

As wealth transfers to younger generations, the future of philanthropy will increasingly depend on the engagement of Millennials and Generation Z. These generations are not just inheritors of wealth; they are shaping the future of giving with their emphasis on transparency, social impact, and digital engagement.

Nonprofits that actively engage younger donors, by aligning their missions with the values and expectations of these generations, will be better positioned to secure sustained support. This includes offering clear evidence of impact, fostering genuine connections through digital platforms, and creating opportunities for younger donors to be involved in decision-making processes.

Securing the Future of Philanthropy

The Great Wealth Transfer is a once-in-a-lifetime opportunity for nonprofits to secure transformative levels of funding. By understanding the scale of this transfer, adopting strategic approaches to planned giving, tailoring engagement to generational preferences, and prioritizing the engagement of younger donors, nonprofits can position themselves to benefit from this unprecedented shift in wealth. As we move into this new era of philanthropy, the success of nonprofit organizations will depend on their ability to be forward-thinking, adaptable, and deeply connected to the evolving landscape of donor expectations.

This article was featured in our 2024 Fundraising Guide. View the updated guide and more related topics here!

Tania Quigley, CPA

Partner

Tania Quigley has been a member of Cerini & Associates’ audit and consulting practice area since 2005 where she focuses on serving the firms nonprofit and employee benefit plan clientele. Tania has experience in performing financial statement audits and reviews, tax return preparation, cost report preparation and filing, retirement plan audits, and other consulting. Tania brings her expertise, diversified background, and helpful approach to all of her engagements.

For New York nonprofits, the governance cup has runneth over! Not only are nonprofits required to know and follow various federal, state, and local laws, as well as the provisions of their Certificate of Incorporation and Bylaws, but they are also required by law to put in place and follow a variety of written policies, including a Conflict of Interest Policy, an Investment Policy, a Whistleblower Policy, and a Sexual Harassment Policy. All of the foregoing are legally required – but there is more. Nonprofit Board members and officers have fiduciary duties, including the duties of care and obedience. Not following the provisions of the Certificate of Incorporation and Bylaws, and not putting in place the required policies (and then following them), is a breach of both these duties that exposes the Board members and officers to potential personal liability.

So, with all of that as the context, why would we want to add a Gift Acceptance Policy to the mix, given that a Gift Acceptance Policy is not required by law? Afterall, following the provisions of the Gift Acceptance Policy will be part of the fiduciary duty of each Board member and officer. Why add even more responsibilities to the proverbial governance cup, which clearly is already over full and over complex.

Let’s start with a basic question. Why wouldn’t a nonprofit want to accept whatever gift is coming its way? Why would a nonprofit want to say no to a willing donor? If the donor is stepping up with cash, cash equivalents, or with readily marketable publicly traded securities (that the nonprofit could easily sell and convert to cash), the answer is that the nonprofit will almost always want to accept such gifts. But if, on the other hand, the gift could carry significant obligations, liabilities, or risks for the nonprofit, the nonprofit should most certainly not automatically accept such a gift.

• A donor willing to donate real estate to the nonprofit could be a wonderful development for the nonprofit. Why look a gift horse in the mouth? But under some circumstances, the liabilities could outweigh the benefits. What if the ownership of the property exposes the nonprofit to significant environmental liabilities? Such liabilities could readily exceed the value of the property, and drain the nonprofit’s existing assets so that the nonprofit is less able to fulfill its mission. What if the property is in need of urgent and immediate repairs with a significant price tag? What if the property comes with significant insurance, maintenance, and other carrying costs? What if the right to use or the right to sell the property is subject to significant restrictions? What if the property is the subject of current or anticipated litigation?
• Gifts of personal property can also pose challenges. For example, a new car, truck, or boat that can be easily resold is one thing, but an old car, truck or boat that is not running and requires costly repairs poses a different set of issues. For furniture, computers, and equipment of all sorts, the same principles apply. For all of the above, there could be repair, maintenance, transportation, and storage costs. In addition, certain donations would be ideal for one nonprofit, but could present burdens for another. Food to a food pantry, personal hygiene products to a shelter for the unhoused, or pet food to a pet shelter are no brainers. But those same products delivered to different nonprofits without the tight mission fit could be a burden. Similarly, gifts of art work can involve more than meets the eye.
• Restricted gifts also can be problematic. The nature of the restrictions can pose significant difficulties. If a donor makes a significant monetary gift subject to use only for a particular project, but the monetary gift is not sufficient to fund the project, does the nonprofit pull funds from other aspects of its mission-related work to complete the project. What if our facility has a perfectly functional swimming pool, and we receive a $1 million donation to be used to install a second swimming pool? We don’t really need the second swimming pool, and by the way, it will cost us $3 million dollars to install the second pool. Do we want to accept the restricted $1 million gift? And once we have installed this pool, we will need to come up with the funds to maintain it and to staff it, so there are sustainability costs and concerns that we should be considering. At the opposite end of the spectrum, what if we have hundreds of small donations each with their own idiosyncratic restrictions? Can we justify the administrative burden of managing and tracking these gifts and making sure that we honor the restrictions (which is a legal requirement)? Should we analyze under what circumstances we might not want to accept a small donation with idiosyncratic restrictions?
• A nonprofit’s corporate purposes govern and limit its activities. A nonprofit can conduct activities and expend assets only within the confines of its corporate purposes (as set forth in its Certificate of Incorporation). Activities outside of the limits of its corporate purposes are impermissible and are a breach of fiduciary duty by the Board members and officers. (Again, such activities would constitute a breach of both the duty of care and the duty of obedience.) So, with a restricted gift targeted to specific purposes, we need to assure that those purposes fall within the nonprofit’s corporate purposes before we can accept the gift. There is another lens that we need to apply, and that is to make sure that neither the use of funds to which we are restricted, nor the identity of the donor, poses a problem for our nonprofit in terms of its mission, public profile, and reputation. Certain projects and certain donors could be problematic for a given nonprofit. Accepting a particular grant could (based on the project and/or the identity of the donor) imperil our relationships with, and funding from, other donors in a way that could adversely impact our ability to fulfill our mission going forward. In addition, with any restricted gift, the nonprofit needs to engage in the sustainability analysis of the particular project that was noted in the previous bullet point.

It is plain to see that with each of the categories of donations in the foregoing bullet points, the nonprofit should not automatically accept whatever gift the donor presents. A Gift Acceptance Policy is a tool that can serve two important ends in this context. Firstly, and most importantly, it provides guidelines to the nonprofit’s leadership and staff as to what gifts will be accepted automatically and what gifts will not be accepted until a process of review, analysis, and decision making has been undertaken and completed. Secondly, and not as obviously, a Gift Acceptance Policy is a useful tool to preserve donor relationships. It cushions the potential negative impact on a donor relationship because the message is not simply that we are not accepting your gift, but rather, that we are unable to accept your gift based on our standing Gift Acceptance Policy.

A Gift Acceptance Policy should not only deal with what gifts can be accepted without further review; what gifts can be accepted only after review and analysis; and perhaps what gifts cannot be accepted at all. A Gift Acceptance Policy should also deal with the process for reviewing and analyzing whether to accept the gift. Here, as in many other areas of nonprofit governance, a Board committee with ultimate decision-making authority (with support from staff) can be incredibly helpful. This can be the Executive Committee, the Development Committee, a separate Gift Acceptance Committee, or some other Board committee. (Remember that under New York law, a Board committee must be composed of a minimum of three Board members.) Alternately, the entire Board can have the responsibility of reviewing and analyzing potential gifts, and ultimate decision making authority. As to the adoption of the Policy, a Gift Acceptance Policy can only be adopted by the Board of Directors. The Policy should be reviewed and revised at least annually by the Board, and the Board should monitor compliance with the Policy. The Gift Acceptance Policy should be part of the ongoing regimen of Board and staff training undertaken by the nonprofit. In addition, because the composition of the Board and the staff changes from time to time, the Gift Acceptance Policy should be part of the onboarding process.

As with many aspects of nonprofit governance, the advice and assistance of an attorney with experience in the nonprofit sector is essential, both in developing and drafting the Gift Acceptance Policy, and also in making some of the decisions under the Policy (whether at the Board or the committee level), as well as in implementing those decisions. For example, the wording of restrictions on the use of a gift can be critically important and requires attorney involvement. Similarly, the terms of an endowment and the terms of any naming rights agreement require the active participation of the nonprofit’s attorney. And let’s not forget that there are legal requirements relating to both gift acknowledgment by the nonprofit and written disclosure of goods and services received by the donor from the nonprofit, not to mention IRS filing requirements in connection with which the nonprofit’s accountant should be involved. Finally, it is important to clearly state in the Gift Acceptance Policy and otherwise that the nonprofit and its advisors are not providing the donor with tax, legal, estate planning, investment, financial, or other advice, and that the nonprofit and its advisors are not in any way advising or representing the donor. This is a very common misperception on the part of donors, and a source of misunderstanding and confusion. The donor should be encouraged to have his, her or its own representation.

This article was featured in our 2024 Fundraising Guide. View the updated guide and more related topics here!

David Goldstein, Partner

Certilman Balin, Adler, & Hyman, LLP

Have you or your colleagues uttered these words recently?

…I wish I could rely on my board to………(fill in the blank)
…If only my board would……..(fill in the blank)

If you said, “Yes!” to one or all of the above, please know you are in the majority and not the minority.

While this article will NOT go into the various reasons for that, it WILL offer many tangible approaches specifically related to growing board engagement in your organization’s fundraising strategy.

What’s My Role?

🚨Alert! If you do not yet have an active “Board Member Expectations” Checklist or Role Description, that should be the first step you take in communicating expectations and setting up a structure for overall accountability among your board members.🚨

It is vital to identify and clearly communicate the expectations for your board members (which should build on their required legal duties) — and you guessed it, ideally this is done during the vetting and/or onboarding processes!

But it’s never too late to introduce an expectations document or re-engage around what your organization needs from its board to ensure sustainability and maximization of mission impact.

What’s Our Fundraising Strategy?

Engagement often starts with education. How have you shared your organization’s approach to fundraising with your board? Does your development or advancement director participate in at least one board meeting a year to share an overview of the strategy as well as overall progress?

If not, you have an opportunity to get buy-in and more involvement by sharing your approach.

“Don’t ask for money!”

Most board members are not comfortable asking for money. Most people aren’t comfortable asking for money.

Apologies for the clickbait header – because of course if you have folks on your board who fall into the minority of either being a professional fundraiser or enjoying direct outreach, by all means support their efforts and arm them with helpful messaging.

But for the majority who have an aversion to hitting up their personal networks for cash… here’s where you have a huge opportunity to approach fundraising in a radically different way: focus on relationship-building.

Activating Your Board Members as Relationship-Builders

Offer your board members a menu of ways to participate in your fundraising strategy – and incorporate these items into your expectations document and/or your next board retreat.

Your board members can engage in a variety of indirect fundraising tactics by building relationships, raising awareness, and creating opportunities that ultimately lead to increased donations. Here’s a few ideas:

💡 Network Building & Introductions:

Board members can introduce staff to influential people within their networks, such as business leaders, philanthropists, and community influencers, without making direct asks for donations. These connections can lead to partnerships or future giving opportunities.

💡 Hosting Informal Gatherings:

Board members can organize small, informal events like coffee meetings, dinners, or networking gatherings to introduce potential donors to the organization’s leadership and mission. This creates a foundation for future asks.

💡 Engaging on Social Media:

Sharing stories, achievements, and needs on personal and professional social media channels helps amplify the organization’s reach and visibility.

💡 Leveraging Business Relationships:

Board members who are business owners or executives can explore opportunities for corporate sponsorships, matching gift programs, or cause-marketing partnerships that benefit the nonprofit indirectly through increased visibility and access to new networks.

💡 Opportunities for Corporate Social Responsibility (CSR):

Board members can encourage their companies or other organizations to get involved in volunteer opportunities. Volunteer engagement often leads to deeper relationships and future financial support.

💡 Donor Recognition, Appreciation & Stewardship:

Board members can help host donor appreciation events, which don’t involve direct asks but help strengthen relationships with existing donors. This keeps donors engaged and motivated to continue giving.

💡 Board-Hosted Exclusive Events:

Hosting exclusive tours, behind-the-scenes visits, or intimate gatherings for top supporters can deepen donor engagement without making an immediate fundraising request.

💡 Media Outreach:

Board members with media contacts can help the organization secure press coverage, features, and interviews. Increased media exposure can draw in new donors who are inspired by the organization’s mission.

💡 Ambassadorship:

For the more outgoing board members, they can consider representing the organization at industry conferences, community events, or charity gatherings. By speaking passionately about the nonprofit’s work, they can inspire attendees to learn more and potentially support the cause financially in the future.

💡 Support Capital Campaigns:

Board members can serve on committees for capital campaigns, helping to spread the word and gather support indirectly. They can also endorse or give credibility to campaigns with their involvement, even if they aren’t directly soliciting donations.

By engaging in these indirect tactics, board members become part of a supportive environment that fosters relationship-building and awareness, both of which are crucial for long-term fundraising success.

Getting Buy-In & Creating a Culture of Philanthropy

If all of the above ideas sound great in theory but you’re wondering, but how do I actually get my board members to engage in these tactics?

The important component of “buy-in” and the lengthy process of working toward a shift in culture needs to be confronted.

When it comes to approaching accountability in both a respectful and gentle way, this is where pairing a board member self-assessment with your board responsibilities document can be effective. This allows your board members a chance to reflect on their participation – what they intended to do versus where they are currently showing up. It also opens up a larger conversation around where the organization is doing well and where there are opportunities for growth.

In addition, the cornerstone of the above approach is a focus on skills-based volunteering. This encourages your board members to use what they’re good at to grow your impact!

From a broader standpoint, this is where a board matrix exercise can be an effective way to gather your board’s overall composition of skills, representation, leadership style, and much more.

Make it Easy!

It goes without saying that the tactics above are more impactful when board members are provided with messaging. If you don’t’ have the capacity to customize your messaging you can connect your board members to free resources, such as BellesBoard’s AI-Powered Fundraising Coach.

Finally, be sure your board members have a central secure location, such as a board portal, to access their expectations document and board information all in one place.

This article was featured in our 2024 Fundraising Guide. View the updated guide and more related topics here!

Christine Deska, Co-Founder & President

BellesBoard & Nonprofit Sector Strategies