Donor Acknowledgment Is Important for Every Nonprofit

“If the only prayer you ever said was thank you, that would be enough.” — Meister Eckhart

A modest gift arrived from a donor who I had hoped would give more. My chief development officer saw my frown, closed the office door and sat down. “Laurence,” he said, “every gift, no matter the size, is important. He didn’t have to give us anything.” That was 28 years ago when I was the CEO of a large nonprofit. I recall the sting of that lesson often. I was schooled about gratitude.

I don’t think we talk enough about gratitude and how to artfully acknowledge our donors. I’d like that to change—at least right now between you and me. We can do this.

Be Unique and Personal

Are you using the same thank-you letter repeatedly? If so, that needs to change. Instead, add elements that make your letters unique to your nonprofit and update the letter frequently. Also, donors should feel like they are communicating directly with you and not like they’re receiving a generic message that could apply to just anyone.

Additionally, you don’t have to send your donor acknowledgment letters just by mail. In fact, many donors prefer to receive them by email. Just be sure to include a PDF attachment of the official letter with the email, so they can easily include it in their tax return. To find out their preference, you will have to survey your donors and ask them.

5 Immediate Actions

Consider these five immediate actions to truly acknowledge your donors:

1. Call one donor a day to say thank you. Leave a message if you get their voice mail. Explain what their gift meant to you. Speak from your heart.
2. Send a handwritten note.
3. Invite them to attend your next annual meeting as your guest.
4. Give them an award at your next gala if it is warranted.
5. Invite them for a tour or to attend your program.

The point of these actions is to engage the donor, learn about them and build a relationship centered on your work and your mission. It’s not a personal relationship, but a “philanthropic relationship.” The donor needs to be invited into your organizational story, its values and its unfolding narrative. They need to be central to that narrative. This is why you generally don’t send a donor flowers or chocolates to acknowledge them. This is not dating. This is a unique type of relationship whereby two people are coming together to help a third person who is in need!

Consider a Stewardship Matrix

A stewardship matrix is a grid used to determine what type of acknowledgment each donor receives. This matrix is typically segmented based on your target donor groups, and you can make it as general or detailed as you like. Here’s a sample stewardship matrix from Training Resources for the Environmental Community that I like very much.

Make your own matrix to fit your development program. 

Formalities

As you know, the IRS requires public charities (also known as 501(c)(3) organizations) to send a formal acknowledgment letter for any donation of more than $250. The donor may use this letter as proof of his or her contribution and claim a tax deduction. But my thoughts are well beyond that letter of the law.

For online donations, the standard rule of thumb is to automate your thank-you messages, so they are sent out immediately following each and every gift. The sooner you thank donors for their gift, the better! With gifts received by mail, some experts say that the letter should go out within 48-hours of receiving it. I say within the same work week is fine, but no longer than that.

Your acknowledgment letter should include the following information:

• Your nonprofit’s legal nameand that it has tax-exempt status as a 501(c)(3).
• Your EIN(Employer Identification Number), so that the donor may verify the organization’s status as a recognized nonprofit organization or advocacy group.
• The name of the donorthat they used to make their gift. This is so they can avoid confusion when filing their taxes (and so that the IRS can spot fraudulent filings).
• The date the gift was receivedby your nonprofit. Remember, you’ll need to send a letter for each individual gift a donor makes to your nonprofit. You can’t simply send a mass acknowledgment letter with the dates of all gifts made during that year.
• A description of the donation. For cash gifts (including cash, checks, credit/debit card payments and payroll deductions). This corresponds to the monetary value of the donation you receive. For non-cash gifts, simply describe the gift without assigning it a cash value.

This should be a one-page letter on your agency letterhead. You want your donors to immediately recognize that this letter is a formal donation acknowledgment and to not disregard it as junk mail or a generic engagement letter. I always use a “live” first-class stamp, and I make sure that the exterior envelope is a nice linen quality.

The chief development officer may send and sign the letter; it does not always have to be the CEO. Ideally, it should be the staff member or board member that knows the donor the best.

Year-End Statements

If your organization issues receipts after each donation, then you may not have to send a year-end statement, but I’d really like you to consider it. A year-end statement is a simple letter that reminds donors what they have contributed cumulatively over the year. It’s a significant opportunity to thank them for their support and show them the cumulative amount of their giving. Your donor database probably has these templates built into them. Most donors are unaware of their total annual giving and when they see the number, it makes them proud that they have given that much. I always like to point out the range of gifts we received that year and where their gift fits into that group.

Naysayers

Each year, there are always one or two donors that tell me not to acknowledge their gift.  “Save the stamp,” they say. I usually just smile back. It feels awkward to be told that I can’t say thank you. It may be one of the few times that I ignore a donor’s request. It’s never backfired on me. I doubt anyone doesn’t want to be thanked.

Par Excellence

One of the best acknowledgment letters I ever received was from The Rev. Tilden Edwards, the founder of The Shalem Institute. It was a smallish card with the organization’s name embossed eloquently on the exterior. Inside was a two-sentence note, typed, and he signed it by hand. The message was about how valuable I was to Shalem and how much he appreciated me. A day or so later, a more legal acknowledgment letter arrived under separate cover. When I saw Tilden next, I asked him if he had done that just for me or was that his style with everyone. It was the latter. The magical aspect was that Tilden was teaching me about Shalem’s mission, a mission that embodies personal care and contemplative awareness. That really is the standard for all donor acknowledgment letters.

What actions have you taken that work best in acknowledging your donors? Please share them with me.

P.S. If government grants are of interest to you, you’ll want to read my interview with our most successful grants officer.