Nonprofits are doing their own form of triage work as the full impact of the COVID-19 outbreak is felt throughout our community. Leaders are figuring out remote work situations, what programs to continue and how to fund their organizations.
As things settle into a “new normal” for the time being, many clients and other nonprofits are wondering if it is appropriate to make a fundraising ask? The answer depends on the type of ask and the need for funding.
I’m seeing several well-written and proactive emails from nonprofits with clear examples of how they are continuing to serve their mission. Most are not making an initial ask. This is the time to offer resources and demonstrate good stewardship of current funds.
The organizations that do include an immediate ask are falling into two categories: ones who are providing much needed services to the economically disadvantaged and their clients have an urgent crisis; and those organizations who are asking prematurely for their own business needs.
When you clearly explain that your clients have an unusual need during the COVID-19 crisis, such as access to meals for their children, or their parents are out of work and need help with basic needs, donors will typically respond to these appeals.
However, if a nonprofit is asking for their own operational needs without clearly explaining the why, these appeals are less likely to be successful. Just stating that “because of the COVID-19 situation, we must raise $20,000 right now to operate” isn’t going to engage your donors.
We must be sensitive to our donors current financial situations as I mentioned in an earlier article, Virtual Fundraising Strategies. Donors who give from their annual incomes or their assets are all feeling the current economic strain. Asking too soon and too often will risk alienating your donors.
Here are some options to include in your plans over the next few weeks:
Donor Advised Funds
The timing of your ask is important. Once you’ve updated your donors and made personal contact with your major donors, your next requests should be to donors with a Donor Advised Fund. These individuals have already set aside assets for charitable purposes and are more likely to consider a significant gift during these times.
Major and Planning Giving Options
As you have been reaching out to your major donors to check on them and share updates, consider planned giving options for some of your donors. Since large, public fundraising events are unlikely for the foreseeable future, invest this time in continuing meaningful relationships with your major donors. Revocable gift options can ease donors’ concerns over uncertain financial futures while a charitable gift annuity can offer tax benefits to the donor.
CARES Act – Additional Charitable Deductions
The recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act includes several charitable contributions deduction modifications for individuals and corporations. The CARES Act identifies a qualified charitable organization as described in section 170(b)(1)(A), which includes 501(c)3 public charities, schools, hospitals, some private foundations, and medical research.
Starting in 2020, individuals can deduct up to $300 donations to certain qualified charitable organizations. Even if they don’t itemize, all taxpayers will be eligible. Donor-advised funds are excluded from this option.
Corporations will have an increase from 10% limitation on charitable donations to 25% of taxable income in 2020.
Asking is only one part of the ongoing relationship with your donors. You don’t want to raise funds through transactions that are likely one-time gifts. Focusing on your donors and their relationship with your organization will ensure ongoing support during good times and the bad.
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.