Last week I wrote about best practices in donor relations. Click HERE to view that article.
Now, I want to share a couple of worst-case scenarios that have happened to nonprofits that didn’t follow the wishes of their donor.
· Singer Garth Brooks was awarded $1 million dollars in a case against an Oklahoma hospital after the hospital backed out of an agreement to build and name a women’s health center after the singer’s late mother. Instead of returning the original $500,000 donation to Mr. Brooks, the hospital contended the gift was unrestricted and used the funds for other construction projects.
Yes, donors can and do file lawsuits when they feel their donations have been mishandled. Often this action isn’t about the money itself but rather the integrity of the donor’s wishes to be honored by the nonprofit.
· In April 2021, donor Darla Moore turned on the University of South Carolina (USC) after the university failed to acknowledge her mother’s passing. Ms. Moore and her family had contributed over $75 million to her alma mater including the business school which bears her name. In a critical letter sent to the USC board and administration, Ms. Moore admonished the university for failing to send any acknowledgment to her family on her mother’s passing which was publicized to the community.
Bad press and unhappy donors are a recipe for fundraising disaster. How many donors might be influenced by negative stories about your organization? The question becomes, can your nonprofit be trusted to use other donations as intended?
With larger and complicated gifts, be sure to have a written gift agreement in place. This wasn’t done in Mr. Brooks’ example and could have provided a blueprint for his intentions.
Also, don’t agree to vague and unrealistic conditions in order to gain a larger gift. If your organization cannot administer the gift as laid out in the agreement, don’t accept the gift.
Finally, have an “out-option” in your gift agreement. If at any time in the future, the nonprofit cannot use the funds as directed, have a clause in the agreement to contact the donor for guidance. If your nonprofit no longer has a certain program, then ask the donor if the remaining funds can be used for another purpose.
Plain and simple, the Golden Rule in fundraising is to treat the donor as you would like to be treated. Follow the Association of Fundraising Professionals Code of Ethics and don’t allow for the possibility of a donor coming back with a lawsuit or negative publicity.
Michelle Crim, CFRE
Dynamic Development Strategies can help. We offer coaching and fundraising services for our nonprofit clients. We specialize in startup and smaller nonprofits because we understand your challenges. Please contact us for more information.