Tax-exempt organizations throughout New York state are in a state of confusion regarding future governmental funding and the potential for funding clawbacks. With governmental funding being unpredictable and costs increasing significantly in the current climate, more nonprofits are ramping up their fundraising efforts, thus increasing the competition for contributions. The ability to raise funds can make the difference for many tax-exempt organizations in this uncertain environment.

Last year, Americans donated a record $471 billion to charities. Do you believe your organization received its fair share? As we navigate the season of giving, it is time to review your fundraising efforts by considering the following:

Explain the need and how your organization meets that need — Donors support organizations for numerous reasons including believing in an organization’s mission, being personally impacted by the nonprofit, or they just want to feel good. Why should a donor donate to your organization? To answer this question, you should spotlight the community needs and what your nonprofit is doing to fulfill those needs so potential donors know why their assistance is needed. Tell your story through visual tools such as charts and graphs that highlight your organization’s progress over time. The most powerful way to demonstrate your organization’s impact on the community is through testimonials. Put a face to your mission by highlighting the successes of the individuals served by your not-for-profit. 

Review your solicitations — Donors, especially this time of year, are receiving numerous solicitations through various means. Consider the following formats to capture donors’ attention:

• Printed appeal letters — Half of the battle with physical appeal letters is getting people to open them. Consider colored envelopes, stylized address labels, or other details to differentiate your letter from the rest. 

• Email — We are constantly bombarded with email so make sure your appeal sticks out by being personal and timely. Use a subject line that is most meaningful to your donors.

• Social media — Create a series of eye-catching promo graphics that are properly sized for Facebook, Twitter, TikTok, etc. While managing the various social-media sites can be time consuming, they are vital to fundraising success.

Regardless of the way you send your solicitations, make them stand out. Also, remember to review your mailing lists regularly. Nothing can turn a donor off faster than receiving several copies of the same solicitation.

Knowing who your donors are enables you to tailor your solicitation materials for the audience. When you are preparing your solicitations, make sure you know your target audience. What motivates them to give? Do you want to target hundreds of small donors or a more limited number of large donors? Are they new donors or have they had a long-term relationship with your organization? 

Not only do you want to have solicitations that capture the eye of donors, but you also must ensure they are compliant with laws and regulations. New York State law requires charitable organizations’ solicitations to make a general statement that a copy of its latest annual report may be obtained, upon request, from the organization or from the New York State Attorney General’s Charities Bureau. In addition, a law passed in March 2019 requires any solicitation, including solicitations by professional fundraisers or professional solicitors on behalf of a charitable organization, to include a statement that specifies the website and telephone number of the New York State Office of the Attorney General Charities Bureau (www.charitiesnys.com, 212-416-8401). It is important that you know the laws and regulations surrounding soliciting contributions for each state in which you solicit. Are your solicitations compliant?

Make it easy to donate — Make sure your website is setup to accept donations. Your “Donate” button should be prominently featured on every page of your website. The button should be large and colorful, so it is obvious and won’t be easily missed. Studies have shown that pop-ups on your organization’s website can significantly increase donations. Consider adding a pop-up.

Recognize your donors — The best way to engage existing donors and turn them into recurring donors is to thank them. Donors greatly appreciate a timely and personal acknowledgement of their donation. If your organization’s thank-you letters come out of your fundraising software, consider a simple handwritten thank you on the letter or having the CEO personally sign. The personal touch can go a long way in creating life-long donors. In addition, make sure your thank-you letters explain how the donation helped meet your organization’s needs. 

Another consideration is a donor-recognition program to call attention, both publicly and privately, to the people who help your organization achieve its mission. Most donors, especially major donors, love being recognized for their philanthropic efforts. Recognize all donors as you never know when a small donation can turn into a larger donation in the future based on your actions. An effective way to recognize your donors is to thank them on social media, plus you may receive the added benefit of attracting new donors.

Tax deductibility of donations — Each donor’s situation is unique and will affect how much, if any, of the donation the person can deduct for income-tax purposes. Thus, you will want to ensure that there is not a blanket statement in fundraising solicitations, or thank-you letters such as “your contribution is tax deductible.” Instead, consider language such as “please consult with your tax advisers on the tax deductibility of your contribution”. Never assure a donor that a contribution is deductible.

Tracking usage of donations — An organization needs to track how its donations were used to be able to report back to donors, especially if the donation is restricted by the donor for a particular purpose. Demonstrating how the funds were spent allows your organization to build trust with your supporters and invites them to give again and again. A nonprofit never wants to take a donation and not use it as intended, as this could have a significant negative effect on your credibility with donors. Tracking donations may be accomplished with fundraising software, a spreadsheet, or your general ledger. Each organization needs to find what works best for them. Remember, public trust is key.

Key performance indicators and benchmarking — It’s important to evaluate and celebrate the success of fundraising efforts. The following are key performance indicators and benchmarks that your organization should monitor: 

• Post per dollar raised — This answers the question of whether the solicitation was a success. Cost per dollar raised is determined by dividing expenses incurred by revenue for the solicitation. This metric will help your nonprofit analyze if the time and effort is worth continuing the fundraiser in the future or if its fundraising strategy and approach should be modified. Note that sometimes it may be acceptable to lose money on a fundraiser if it is increasing public awareness of the organization.

• Conversion rate — This tells an organization how successful a campaign was at getting people to donate. To calculate the conversion rate, you divide the number of people who donated by the number of people who received the solicitation. If your conversion rate is low, your organization may need to relook at your solicitation materials and your mailing lists.

• Number of gifts secured — This is a measure of how many gifts your organization received and can show growth between years.

• Board-member participation rate — It is essential that organizations show that the board is supportive of their activities. The goal is to have 100 percent board-member participation prior to soliciting outside of your organization. 

• Average gift size — This is helpful in evaluating the success of a solicitation. The average donation amount is calculated by dividing the total amount of money received by the number of gifts received.

Fundraising can be complicated and take significant staffing resources but is vital in this time of uncertain governmental funding. As Calvin Coolidge said, “nothing in this world can take the place of persistence.” Determination is key in fundraising. If you are uncertain, please consider having legal counsel review your activities.        

Bettina Lipphardt is a partner and the team leader in The Bonadio Group’s Healthcare/Tax-Exempt Syracuse/Utica Division. She provides consulting and auditing services for a variety of tax-exempt clients. Contact her at blipphardt@bonadio.com