Language:

Blogging Beyond the Numbers

Avoiding restrictions from donations inspired by storytelling
Posted by: Melodi Bunting 7 days ago

Everyone loves a good story.  Storytelling has a long tradition in our culture.  Research has shown our brains are wired for the structure and engagement of a story.  A story has the potential to instruct, influence, and inspire.

Many nonprofits have found this to be true.  Donors are drawn into the mission and needs of the nonprofit through stories of how they are serving their clients.  Imagine hearing about the young girl rescued from human trafficking who through the intervention of the nonprofit has recently graduated from high school and is headed to college.  Or the endangered species that has come back from the brink of extinction through the environmental work of the nonprofit.  These stories instruct and inspire in ways that other communications cannot.

Use intentional wording

While storytelling is powerful and inspires donor giving, it may result in restricted donations.  Incoming donations must be available for both program related activities as well as administrative costs in order for the nonprofit to remain financially healthy and sustainable.  So how can a nonprofit optimize the impact of storytelling, yet have discretion over the donations raised?  The key is in planning and intentional wording.

Let’s look at an example

When the donor clicks on the website’s “Get Involved” button they are directed to the next page where it explains that a donation of $150 will help a girl rescued from human trafficking receive an education.  The page is asking the donor to fund a girl’s future with their donation.  Since providing rescued girls with educational assistance is the overall mission of the organization the nonprofit retains discretion over use of the donations.

On the other hand if the site asks for $150 to pay for GED testing for one rescued girl that is a specific purpose and this donation would be restricted to that need unless there is an additional disclosure such as “Occasionally, we receive more donations for a given project than can be wisely applied to that project. When that happens, we use these donations to meet a similar pressing need.”

Sample wording

Using wording such as “Your donation to this year’s gala will be used toward fulfilling the organization’s mission of providing alternatives for young girls” is an example of the wording for inclusion in event fundraising materials.  The nonprofit should also consider working with donors who are conducting estate planning by providing sample wording for potential future bequests.

Provide a donation receipt

If the donor has not clearly restricted the donation it is best practice for the nonprofit to provide a donation receipt or thank you including the following, “NFP Name is recognized by the Internal Revenue Service as a 501(c)(3) tax-exempt, non-profit organization.  No goods or services were exchanged for your tax-deductible donation.  This donation is received with the understanding that NFP Name has complete discretion and control over the use of all donated funds.”

By combining impact stories with a clear call to action donors are more likely to respond.  To ensure these responses do not hamper the nonprofit’s resources with restrictions be sure to plan ahead and provide clear wording on how donations will be utilized.

 

Want more information like this?

Subscribe to our email list to get our latest non-profit blog posts and upcoming seminars delivered to your inbox!

 


Melodi Bunting

About the Author

Melodi Bunting, CPA, CMA, CGMA, Training and Career Development Manager at Wegner CPAs, develops and coordinates effective internal and external training opportunities, and constructs a career development plan for each staff member of the Assurance department. Additionally, Melodi works with the audit team performing audits and tax return preparation for a number of different tax-exempt organizations.


 

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *