Nonprofits: Forget About “Better Late Than Never”

Last week the Greater Good Geek blog focused on nonprofit researcher Penelope Burk’s findings. This week “The Geek” will highlight another of Burk’s ‘best practices’ in writing thank you letters to donors – which can be summed up in two words:

Be prompt.

Burk conducts surveys of those who donate to nonprofit organizations. Getting a prompt thank you note is something donors do expect. Burk’s research on thank you letters, by the way, culminated in a list of the 20 Characteristics of Great Thank You Letters which was published in Burk’s Donor-Centered Fundraising.

But donors’ expectations is just one reason to be prompt. Another reason comes from the IRS. They state that a donor is required to “keep a contemporaneous written acknowledgment for a charitable contribution.” That key word – contemporaneous – essentially means “be prompt.”

Mentioning the IRS is always a good excuse to point you to their handy Charitable Contributions Guide for Tax Exempt Organizations. “The Geek” suggests having this guide at your fingertips and reviewing it periodically.

So because the Greater Good Geek is always looking for fun ways to remember nonprofit best practices, here is a haiku poem to remind you of this important thank you note element. Have a great #HaikuTuesday as well!

10 Haiku Tuesday

 

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One proven tip for thank you notes to donors

Nonprofit researcher Penelope Burk has written extensively about fundraiser best practices, including “donor-centered thank you letters.” Today’s “Greater Good Geek Nonprofit Haiku Tip” focuses on one of these proven tips for a great thank you note. In fact, here is more info on and the citation for Burk’s research (check out number 9 – the inspiration for today’s poem).

9 Haiku Tuesday

Are your donations wasted?

You have made cash donations to charities. You have probably thought about how those nonprofits are spending the dollars you give. But you trust them to use your donation wisely (otherwise you probably would not have given).

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In your mind, you might picture the organization using your money to buy cans of soup or bandages or other items to help those in need. How would you feel if your donation was used to buy advertising for the charity, to pay for the nonprofit’s fundraising activities or for other ‘overhead’ costs? Would you feel your donation was wasted?

Overhead Costs

There are two conflicting opinions on the question of overhead. Briefly summarized, they are:

  1. The less a charity spends on overhead costs, the better
  2. A nonprofit’s effectiveness at solving problems is more important than the amount it spends on overhead.

Charity Watchdogs

There are a number of charity watchdog groups that help people decide how to donate their money. Charity Watch is one such group that takes the first position (the less a charity spends on overhead costs, the better). In fact, a nonprofit’s spending is a big factor in the rating Charity Watch gives. If a charity spends 36% or more on overhead costs, that organization will receive an efficiency grade of C+ or lower (all the way down to an F).

Charity Defenders

A number of people and organizations are starting to speak out on the other side of the “overhead” question. The founder of the AIDS Ride and self-described “Charity Defender” Dan Pallotta gave a TED Talk (that garnered over 3.5 million online views) supporting the second opinion (A nonprofit’s effectiveness at solving social problems is more important than the amount it spends on overhead).

In this TED Talk (titled “The way we think about charity is dead wrong”) Pallotta says “…the next time you’re looking at a charity, don’t ask about the rate of their overhead. Ask about the scale of their dreams, their Apple-, Google-, Amazon-scale dreams, how they measure their progress toward those dreams, and what resources they need to make them come true, regardless of what the overhead is.”

Define “a wasted donation”

This is a fascinating debate, and I encourage you to visit Charity Watch’s web site to see how they calculate their ratings and I encourage you to take a look at Dan Pallotta’s TED Talk to hear more about his experiences and thoughts about overhead. Taking a look at these positions may even change your definition of a “wasted donation.”

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My position on this is closer to Pallotta’s than to Charity Watch’s. Although it makes my stomach hurt to watch reports on 60 Minutes about charities that abuse the trust of donors by pocketing donations for the personal benefit of the administrators instead of serving those in need, I think that a Charity Watch-type black and white grading system is not the solution. How a nonprofit achieves its mission is a nuanced road – and as Pallotta points out, there are some “unwritten” rules that need to be rethought. I believe, for example, that one “rule” is that grant funds should not be given for overhead costs. As a grant writer, I have seen this rule backfire. I have seen, too often, a nonprofit decision-maker hope that creating a new (and unneeded) program will somehow obtain a sliver of funding for vital overhead costs. Trying to “game” the system in this way demonstrates that there are many “unwritten” standards constraining the work of nonprofit organizations. And if a nonprofit is constrained, how can it achieve its mission?

Questions: What goes into your decision to make a donation? Have you consulted Charity Watchdog ratings? If so, what did you think?

Images: U.S. National Archives, Internet Archive Book Image