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How Fundraising Compliance Drives Donor Trust

Samantha Hunter
Published:  07/19/2021
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Photo by NeONBRAND on Unsplash

History shows that during challenging times or in response to natural disasters, Americans tend to make charitable donations in record numbers. Giving USA’s latest report shows that this holds true for 2020. 

American’s gave a record $471.44 billion in 2020 setting a record for philanthropic giving. Individuals represented 69% of charitable giving at $324.10 billion. Although giving dropped immediately after the pandemic, individual donations rebounded quickly.

With the rise in online fundraising providing nearly limitless opportunities to reach new donors, potential supporters have more giving opportunities than ever before. Because of this, demonstrating your organization’s commitment to fundraising compliance can help solidify your status as a well-run organization with a mission worthy of support. 

A look from your supporters perspective 

Put simply, compliance is the law and it’s a governance best practice. It’s essential to protecting your nonprofit's leaders, staff, board, and brand reputation. If you don’t become compliant, you risk fines, penalties and even the loss of the ability to fundraise. 

But there’s another equally important reason to be compliant. Donor trust. A study conducted by Fidelity Charitable found that 81% of donors reported nonprofit transparency and accountability as being the number one concern when making donations to a nonprofit. 70% of respondents rated the importance of trusting a charity before giving as an essential requirement before giving. 

It’s not enough for a prospective donor to feel connected to your hospital or health system and its mission. They need to trust that the gift they are going to give you will actually go to support your organization as it's been represented. 

This means it's on the organization to reassure existing and prospective donors about legitimacy and to distinguish the organization as a best practice organization to win donors attention and gain their trust. 

Donors are doing their research

Unfortunately there are copycat nonprofits with lookalike websites to try to take advantage of the generous public. In an effort to avoid making donations to organizations that might not be representing themselves accurately, one in three donors researches online before making a gift. 

There has also been a rise in many independent charity evaluation tools that are available to donors to help combat these copycat nonprofits. Most states also maintain databases that allow prospective donors to see if a charity is registered and in good standing with the state at the click of a button. 

This is all done to make donors feel comfortable when considering making a donation to a new organization. It’s also something to keep in mind as a way to differentiate your organization to meet donors where they are. 

Message your compliance to reassure donors 

We’ve established that donors are doing the legwork to make sure organizations they work with follow compliance laws. So it’s important to take advantage of the opportunity to message to donors so they can make an informed decision about potential gifts. 

25 states require nonprofits to provide charitable disclosure statements that are generally required on donor correspondence, including solicitations, campaign pledge reminders, and donations receipts. Many nonprofits either fail to include state mandated disclosure statements, or they bury them in small grey font in the most inconspicuous place they can find. 

Though legal language and disclosure statements might at first blush seem dry and uninteresting, you now know that it’s important to donors. There’s an opportunity to distinguish yourself in a crowded playing field from other nonprofits. Featuring disclosures in solicitations in a thoughtful way, shows that your organization is committed to transparency and accountability. 

Consider adding a headline above your disclosures that provide some context. For example, you can frame it as a commitment to good stewardship. You can add a few sentences that explain your organization is committed to responsible governance, financial transparency, accountability, and maintaining your good standing with multiple state authorities. Harnessing the power of disclosures allows you to gain the trust of your supporters, boost their giving, and improve your donor retention rates. 

Trust matters and it enhances your brand 

Becoming and maintaining compliance does more than help you avoid fines and penalties. It demonstrates the character and values of your organization and can also strengthen your credibility overall. Trust matters so you should focus on not just making compliance a priority, but also try to weave it into your brand story and message wherever you can. 

Include your required state disclosure statements on your website donation page and all your fundraising solicitations. A study by NextAfter found that reinforcement of an organization’s commitment to compliance to donors resulted in a 31% increase in donations. 

Fundraising compliance reduces your risk and enhances your brand by safeguarding your reputation, showing your commitment to best practices, builds supporter trust and loyalty, and increases revenue for your organization. 

If you’d like to learn specifics on the importance of online fundraising compliance, check out this webinar

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Meet The Author

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Samantha Hunter
Association for Healthcare Philanthropy

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