Protecting Donor Intent—What It Takes

May 18, 2018

 

Non-profit organizations face two major challenges: one, supporting their cause, for which they depend on their donors. And two, respect their donors’ intent, their passion about their charitable contributions.

 

If nonprofits slip up and fail to upload their end of the agreement with donors in any aspect of the project,  they jeopardize future funding. Not spending money correctly can also result in poor reputation.

 

Therefore, having nonprofit donor management that complies with donor’s intention is therefore quite crucial, whether you’re running a small or large nonprofit.

 

1.  Understanding Restrictions

The first step to adhering to donor intentions is identifying three grant restrictions. Philanthropists approach projects with specific purpose. They want their dollars well-spent, and will provide nonprofits with guidelines on allocation of funds. Donations are categorized as (in terms of restriction):

  • Unrestricted

Unrestricted donations can be allocated just as the project managers deem fit. No specifications are provided by the donor.

Note: though a donation is unrestricted, special attention should still be given to address donor’s intent. It can promote long-lasting trust.

  • Temporarily restricted

Temporarily restricted donations are provided with particular guidelines on how the organization will use them.

  • Permanently restricted

Permanently restricted donations have to be put on hold indefinitely (these are often provided with the intention of generating interest).

 
 
2.  Protecting Intention

A definite mission statement is the first step necessary to attract the right donors. A nonprofit should have a direction, and by stating their mission, they can help potential donors decide whether their interests and goals match.

 

 

Dedication to ethical practices is the next significant step. The slightest deviation from agreed-upon conditions and guarantees, and your organization stands to lose more than just their donations. If you identify any weaknesses in the system, any constraints whatsoever, make them clear beforehand. Interested donors appreciate transparency, and may be willing to overlook a couple of ups and downs if you adhere to honest business practices.

 

The final step: great record-keeping and reporting. How do donors know you’ve allocated their funds according to their wishes? The figures tell all. Generate reports on time using specialized tools and systems.

Great grant/donor management software is the key to getting it all done on-time and on-task. Systems for Good specializes in grant management solutions and donor management, and provides nonprofits with a software design specifically for their workforce.

Contact us today to learn more.

 

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