The way you say “thank you” to donors could be the most important communication you do as a nonprofit organization. How you recognize their generosity, and your plan to keep them engaged with your organization, will often mean the difference between a one-time gift and long-tern support.

During the June 10, 2020 Kids Chance National Conference webinar, Cheryl Doucette, Membership Director, Kids’ Chance of America, was joined by Vicki Burkhart, Executive Director, Kids’ Chance of America, in discussing why donor acknowledgements, recognition, and stewardship are key elements to donor relations.

Key Take-Aways

The Definitions

‍Donor relations is the comprehensive effort to ensure that donors experience high-quality interactions that foster long- term engagement and investment with your nonprofit. Within donor relations, there is:

• Donor acknowledgment: Any donor giving more than a $250 in a single contribution to a tax-exempt nonprofit organization needs a written acknowledgment from the organization to claim that deduction on an individual or corporate tax return.
• Donor recognition: Any action or item used by an organization to express appreciation to or for those providing charitable support to the organization.
• Donor stewardship: The process of managing the relationship between the donor and the nonprofit, the end result of which should be continuous giving.

Donor Acknowledgement

‍There are two components of a donor thank you. One has to do with establishing a good relationship with each donor through a warm thank you letter. The other has a very legal purpose.

The IRS requires public charities, or 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.

Acknowledgement letters should include:

• Organization's full name;
• Statement saying that you are a 501(c)(3) tax-exempt organization;
• EIN number;
• Date the donation was received;
• Amount of the cash contribution;
• Description (but not value) of a non-cash gift;
• Statement that no goods or services were provided by the organization, if applicable; and
• Description and good faith estimate of the value of goods or services, if any, that the organization provided in return for the contribution.

A formal acknowledgment letter sent within 10 days of receiving the donation with a receipt to use for tax purposes satisfies the legal elements, but in addition to that, you can thank donors in several different manners. In fact, most fundraising professionals will tell you that a donor should be thanked seven times! Some thank you ideas to consider include personal emails or phone calls from the organization’s leadership, videos, gifts unique to your organization, donor appreciation receptions or events, social media call outs, or donor spotlights on your website or in your newsletter.

‍Donor Recognition

‍Recognition focuses on how nonprofits express appreciation to or for those who provide charitable support to the organization. Strong donor recognition plans:

• Authentically represent the mission and impact of the nonprofit organization
• Communicate the important relationship between donor support and the organization’s ability to meet its mission
• Acknowledge the donation given, tying it directly to impact on the community the nonprofit serves
• Accurately identify the donor with name and logo

Donor recognition programs should offer three key outcomes for the donor:

1. Access to the organization, its leadership, and audience
2. Information about the nonprofit, its strategic or short-term plans, calendars of events, and annual reports indicating how the organization performed
3. Public or private recognition such as signage at events, inclusion in special print materials, or placing the name of a donor on a building or program

Donor Stewardship

‍Stewarding a donor, simply put, is what a nonprofit does (or should be doing) from the time of the first gift and lasting until that donor no longer has a relationship with the organization. Stewarding is a process by which the organization builds a growing relationship with the donor whereby constant communication and engagement deepens that relationship.

Donor stewardship is often an afterthought, which is risky. In the for-profit world, the best customers are current customers. The same is true for a nonprofit organization. It takes far fewer resources (time, money, effort) to renew or upgrade a current donor than it does to find, cultivate, solicit, and close a new prospect, making stewardship not only beneficial to your fundraising strategy, but also cost-effective for your organization.

Successful stewardship should include these key elements:

• Acknowledging donor support/thanking donors seven times
• Communicating to donors in a variety of ways
• Engaging and involving donors
• Soliciting donor input and feedback/asking them what they think
• Showing donors the impact of their support

The anticipated outcomes of successful stewardship include improved donor retention rates, increased level of donor gifts, increased donor referrals, and a strengthened commitment to the organization’s mission.

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