Frequently Asked Questions About Tax Letters for Monthly Donors
First off, I hope that this is going to be a somewhat quiet week leading up to Christmas or other holidays you may be celebrating. I am very ready for a few quiet days catching up on my reading and my favorite Christmas movies!
I’ve heard from several organizations that they are shutting their offices between Christmas and New Year’s. While this may seem a great time to do so, it’s not very donor-centric. This is when donors sit down to make that important year-end donation!
May I be so bold to recommend that you at least have someone answer the phones or have your development phone forwarded to your cell phone, so you will not miss one single donor?
If you’ve scheduled your year-end emails and you’re busy writing your appeal thank you letters (I hope!), now is a good time to think of your tax letter. A few weeks ago, Lawrence Pagnoni already wrote about year-end statements. He listed everything you need to include.
Also, think of a story you’d like to share with your donors. Start creating a rough draft, so that everything is ready to go come January. And please make sure you include your monthly donors in the mix—no matter their giving amount.
One thing people always ask me is: “Should I list every single monthly gift?” My answer is that you’re better off showing just the grand total as that’s really all the donor needs and use the space to tell an impact story.
It’s a great opportunity to make the monthly donor feel really good and happy that they chose to commit to give to you on a regular basis. Make sure you send this tax letter via email and via postal mail!
The next question folks ask me is: “Should I use the tax letter and ask my monthly donors to upgrade at the same time?” My answer is that this should really be a “thank you” letter with a total overview of giving. They’ll put it with their tax papers. It’s a service you provide to them.
Rather, I recommend that you send an upgrade ask in February to those monthly donors who’ve been giving for a while. I know that some organizations only wait three months before they ask. While that will generate some upgraded givers, it could also create a feeling of “greediness” and the drop-offs will be larger, especially if the donor doesn’t really know your organization and your stories yet.
I recommend waiting at least six months, and in my experience, between nine and 12 months usually works best. You can make the case for an increase. Donors understand that things have become more expensive. They see that your services have expanded and are more needed now than ever before. They also see the impact of their gifts. Your upgrade results will be better if you wait.
So, if you have a moment, start getting your tax letter ready so you’re totally ready to roll in the new year!
Erica Waasdorp is one of the leading experts on monthly giving. She is the president of A Direct Solution, a company serving nonprofit organizations with fundraising and direct marketing needs, with a focus on monthly giving and appeals. She authored "Monthly Giving: The Sleeping Giant" and "Monthly Giving Made Easy." She regularly blogs and presents on fundraising, appeals and monthly giving — in person and through webinars. She is happy to answer any questions you may have about this great way of improving retention rates for your donors.
Erica has over 30 years of experience in nonprofits and direct response. She helped the nonprofits she works with raise millions of dollars through monthly giving programs. She is also very actively supports organizations with annual fund planning and execution, ranging from copywriting, creative, lists, print and mail execution.
When she’s not working or writing, Erica can be found on the golf course (she’s a straight shooter) or quietly reading a book. And if there’s an event with a live band, she and her husband, Patrick, can be found on the dance floor. She also loves watching British drama on PBS. Erica and Patrick have two step sons and a cat, Mientje.