Drive Before You Buy: A Primer on Intelligent End of Year Giving
During the holiday season, temperatures may be dropping, but we warm up to one another. For many, it’s a time to enjoy the company of loved ones, reflect on the past year, and give generously. Chances are, your nonprofit also participates in the season of giving, and asks supporters to give a little more on days like Giving Tuesday.
Ideally, in this warm and fuzzy world, all this might happen easily and without negative consequence. The reality is, however, there can be bad actors playing the Grinch during giving season. But, there’s a way to know who’s who when planning your end of year giving to the benefit of all.
Intelligent Giving for Donors
Many donors plan their gifts far in advance. They know which organizations they want to give to, in what amount, and with what frequency. But, we all come into contact with new organizations constantly, either through our own connections or because they ask us to give. When approached by a new or unfamiliar organization, it’s good to do an equal amount of planning and learn more about the group first. It’s a bit like buying a car: you want to test drive it before you commit.
A good starting point is doing basic due diligence, and donors can achieve that with a few simple questions. Keep in mind, this is a general list, and you might want more or different information depending on your giving situation:
- What is the organization’s mission?
- Where do they operate?
- Who is running the organization?
- Are they legitimate?
- If I give, how much of my gift supports the cause?
- Are they a healthy, stable group that can truly deliver on their programs?
The good news is that answers to these questions are easy to find.
First, donors in most states can use the free databases of state charity officials. Most states require organizations to register and report annually in order to solicit. On those reports, nonprofits file information about their leadership, how they solicit or raise funds, and the purposes of their solicitations. Check your state’s searchable record, and you can see whether the charity is registered, noncompliant, or even in legal trouble.
Authorities like Charity Navigator, Guidestar, and the BBB Wise Giving Alliance also provide free information on thousands of 501(c) nonprofit organizations. Wise donors can find information about the organizations’ financial health, program activities, and key ratios, like how much of every dollar given actually goes to the stated mission. These sites also have their own vetting process, sometimes ranking and accrediting “top-performing” nonprofits.
Finally, donors can contact the organization directly. Do they have a website? Does that website tell you any helpful information? If you call, does someone answer? This basic due diligence is often enough to give you a good or bad vibe about a nonprofit.
We’re not asking donors to go full Sherlock Holmes on charities. Just use common sense and the free resources available to you. If you can’t easily find information on a nonprofit, there’s probably a reason why they’re not being transparent, and it’s rarely a good one. Also remember, if you are being forced to give or feel uncomfortable giving to a particular group, that’s a red flag. In those extreme cases, the above authorities provide additional resources on protecting your rights as a donor.
Intelligent Fundraising for Nonprofits
Transparency is a two-way street. Nonprofits reading the above probably already understand their sense of responsibility when they ask for funds. Tangibly, however, there are a few things your nonprofit can do to make this giving season easy on your donors.
- Compliance with state charitable registration and reporting
Forty-one states require nonprofits to register with the state official prior to soliciting funds from the residents of that state. Unsurprisingly, these requirements vary by state, but it’s important to note that many forms of solicitation trigger the need to register, including online methods such as email, social media, crowdfunding, and having an online “Donate Now” button. Nonprofits should be aware of these requirements and take action to register where required, especially before major or multi-state development initiatives. Keep in mind that the complete registration process can take weeks or months, so a proactive approach is key.
- Compliance with state fundraising disclosure requirements
Once a nonprofit has registered with the state charity official, many states further require that the organization place language on all of its solicitation materials informing donors where they can find more information about the group soliciting them. These disclosure statements clearly inform donors that the organization has registered properly, and provides contact information should they wish to learn more about your organization (which you now know, they do!). Development staff should work closely with their legal teams to ensure compliance with these lesser-known, but critical, requirements.
- Commit to a culture of transparency
Just as donors should exercise common sense when deciding to give, your nonprofit can use common sense and commit to making transparency part of its DNA. Compliance with state and federal reporting requirements is a start, but it’s also important to ensure that your website, solicitation, and program materials are up-to-date. Prominent inclusion of your mission statement, current contact information, data on your programs, leadership, and other helpful references make donors feel good when they decide to give. And, doing so means your program and fundraising initiatives are fully in the public’s eye.
The end of the year is not a time to abandon all responsibility. The extra due diligence and preparation expected of donors and nonprofits go a long way in creating a transparent giving economy. However, with proper planning and preparation on all parties, the end of the year can truly be a joyful, robust, and affirming time of year.
Happy holidays, everyone!
Harbor Compliance is not an accounting or law firm and does not provide tax, financial, or legal advice.
About Harbor Compliance:
Founded by a team of government licensing specialists and technology trailblazers, Harbor Compliance is a leading provider of compliance solutions for companies of all types and sizes. Since 2012, we have helped more than 15,000 organizations apply for, secure, and maintain licensing across all industries.