These suggested practices are provided to assist staff and board members of nonprofit organizations in drafting donor recognition and stewardship guidelines or auditing current guidelines and procedures. Each organization is unique and should adapt these suggestions to reflect its own culture, priorities, and practices.
The Thank You and Acknowledgement Guidelines and Procedures for All Gifts, pages 1 through 3, may be adopted by the staff and reported to the board of directors. The Recognition Opportunities for a Campaign, pages 4 and 5, constitute long-term obligations of the organization and should be approved by the board of directors.
Thank You and Acknowledgement Guidelines and Procedures for All Gifts
The Board of Directors and staff seek contributions from individuals, corporations, and foundations to secure the future growth and mission of the organization. These guidelines and procedures govern the recognition of all gifts (annual, special, major, capital, endowment) and the stewardship of donors.
Gift Thank You
Gift thank you notes are the response from the head of the organization, board members, development director, and/or program managers most involved with the donor or the program(s) supported by the gift. Based on the size and culture of the organization and the volume and size of gifts, each organization should determine which staff members are responsible for the gift thank you. For example, perhaps the CEO is assigned to send notes to donors of gifts over $XX,000 and to current and former board members for gifts of any size.
A gift thank you is timely, authentic, and personalized.
- Timely: Gift acknowledgment letters are sent within three business days of receipt of the gift. A quicker response is even better.
- Authentic: Gifts are acknowledged through the medium in which they were received—gifts by mail are acknowledged by a mailed letter; gifts made electronically are immediately acknowledged electronically (and followed by a written personalized thank you as appropriate), etc.
- Personalized: All thank you letters are addressed to the donor(s) and hand signed, preferably with a personal note. Depending on the volume of gifts and size of gift, more than one person is encouraged to send a note. Consider giving board members the names and contact information for two or three donors to thank by telephone or in writing—especially donors with whom the member has an existing relationship.
A gift acknowledgement is the written correspondence from the organization to the donor required by the Internal Revenue Service. Whether electronic or in print, the acknowledgement includes the amount and date of the gift, any restrictions on the use of the gift, and any benefit the donor received for the contribution. (See IRS Publication 1771 for a comprehensive explanation of substantiation and disclosure requirements for charitable contributions.)
Below are examples of written acknowledgments provided by IRS Publication 1771:
- Thank you for your cash contribution of $300 that [organization] received on [date]. No goods or services were provided in exchange for your contribution.
- Thank you for your contribution of a used oak baby crib and matching dresser that [organization] received on [date]. No goods or services were provided in exchange for your contribution.”
- Thank you for your cash contribution of $350 that [organization] received on [date]. In exchange for your contribution, we gave you a cookbook with an estimated fair market value of $60.”
Of course, the acknowledgement letter can also include other information such as recent accomplishments, plans for the future, or stories about service recipients. Consider giving donors the option to request no public recognition, such as: “Please let us know if you do not want to be publicly recognized.”
Additional Acknowledgement Language
If Benefits Have Been Received
Consider adding an explanation to your donor’s acknowledgement letter, such as: “Gifts to [organization] are tax-deductible to the full extent provided by law. If you receive a benefit because of your contribution, such as merchandise or other goods and services in excess of a token gift, then only the amount that exceeds the fair market value of the benefit received can be deducted for income tax purposes.”
For Multi-Year Pledges
State the terms of payment in the acknowledgement letter; tell the donor that a reminder letter will be sent one month prior to the date the next payment is due—and then send the reminder. It is not necessary to send an acknowledgement after each pledge payment.
For Monthly or Quarterly Pledges
Acknowledgments for multiple-payment pledges through payroll deduction or credit card are acknowledged when the pledge is made. At the end of the calendar year, an accounting of the charitable gifts for the year is sent from the finance department. For major donors, the end of the year or the beginning of next is an appropriate time for a personal letter from the CEO describing how the gift made a difference to those served by the organization.
Other Considerations For Thank You and Acknowledgement Guidelines
The organization determines when a signed gift agreement is appropriate, usually at a certain gift amount and/or for gifts restricted for one or more specific purposes. The agreement includes the amount and date of gift, any restrictions on the use of the gift, and recognition expectations—and is signed by the donor and the organization’s CEO. Draft gift agreements are reviewed by the organization’s and the donor’s legal counsel.
Generally, all gifts are recognized in the annual report, in print and electronic newsletters, and on the website. Some organizations categorize donors by the size of the gift, with the largest gifts listed first. Other organizations may choose to list all donors alphabetically.
Some gifts may also be recognized at a public event or in a public venue, perhaps with signage or special print materials.
For very large capital or endowment gifts, multi-year or permanent recognition may be given. (See Recognition Opportunities for a Campaign on the next page.) The board of directors approves these recognition opportunities.
Ongoing Donor Stewardship
Some organizations choose to give selected donors a gift to commemorate their generosity. The gift should be appropriate to the organization’s mission and attractive but not extravagant for the culture of the organization.
There are many and varied ways to express gratitude to donors and keep them “in the know” about the organization, its programs and services, and its impact on the community. Here are a few suggestions.
- Include all donors in all regular emails and mailings to the organization’s constituents, such as newsletters and annual reports.
- Send occasional one-page updates about specific projects to that project’s donors and supporters.
- Ask the CEO or project manager personally to call or meet with all donors of $XX,000 or more at least annually to report progress and milestones.
- Text a photo or send a hand-written note to selected donors.
- Invite and recognize major donors at openings or significant events.
- Use printed programs to highlight donors and the role of philanthropy in accomplishing the organization’s mission.
Recognition Opportunities for a Campaign
Organizations that are planning for or in the midst of a campaign need to discuss, draft, and seek the board’s approval of campaign recognition opportunities. These are policies and are the prerogative of the board.
Campaign recognition discussions offer the opportunity to consider three related topics:
- gift restrictions;
- named entities and physical spaces; and
- named endowment funds.
The suggestions below are drawn from best practices in fundraising, from our campaign consulting experience with scores of nonprofit organizations, and from the recognition opportunities these organizations have used for their donors.
1. Gift Restrictions
Campaign gifts may be given unrestricted, restricted to broad fields of interest, or designated for one or more specific programs or purposes.
- Unrestricted gifts can be used by the organization for its priorities and, therefore, are the most beneficial. Unrestricted gifts of all sizes are welcome.
- Field of interest funds, established by the organization, are attractive to donors who want to assure their gifts are used for purposes most important to them. (Such fields of interest might include a Performance Fund, Family Education Fund, or Facilities Fund.) Field of interest gifts of all sizes are welcome.
- Designated funds are for one or more specific purpose(s), such as a fund to support a new gallery, a fund to endow a specific staff position, or a fund to support a particular program. Designated funds must meet a minimum amount unless the gift is added to an already-established designated fund. The board of directors approves the gift. The donor and the organization execute a signed gift agreement. The agreement includes language such as: “In the event the designated purpose of this gift ceases to exist or becomes impossible, impractical, or too difficult to administer at some time in the future, the board of directors retains the right to redirect the funds held in this endowment for a purpose or purposes as similar as possible to the original intent of the donor.
2. Named Entities and Physical Spaces
Naming an Entity
- The opportunity to name an entity depends on the size of the gift.
- The recommended gift amount for some organizations is either 20% of the cost for the facility or 50% of the private fundraising goal.
- Some entities require an additional 20% of the gift amount for a maintenance endowment.
- Some entities limit naming opportunities to individual or family names, rather than commercial enterprises.
- The name is in perpetuity.
Naming a Building or Space within an entity
The values for these recognition opportunities are based solely on utility, placement, or perceived appeal and do not necessarily reflect the gift’s designated purpose or the actual cost of construction. Donors are encouraged to consider undesignated gifts and/or the least restrictive designation.
- The suggested gift amount varies for each building or space and is identified in the campaign’s Gift Recognition Opportunities.
- The naming may be for a period of time (10-20 years or more) or until major renovations are required in the future. The original donor is offered the first opportunity to fund the renovation. Even if the original donor does not fund the renovation, the original donor receives appropriate permanent recognition (perhaps a plaque in the room).
- Names of spaces are displayed in an architecturally appropriate manner. Donors are consulted as to how they want the recognition worded—for example, Fred and Thelma Smith or the Smith Family.
- In the case of naming seats in an auditorium or performance space, remind donors that a named seat does not mean the donor has a reserved seat.
- When considering the wording of signage, do not imply that the gift paid for the actual cost of the specific space. Consider wording such as: “This room is dedicated to the generosity of . . .” or “Thank you to the Smith Family whose generosity helped to make this room possible.”
3. Named Endowment Fund
The organization will decide a minimum gift amount for an unrestricted or field of interest named endowment. If the endowment fund is designated for a specific purpose with estimated annual costs, such as a professorship, a specific program, or a scholarship, the minimum gift amount must be adequate to provide the necessary annual distribution from the fund.
- An endowment fund name is in perpetuity.
- The donor (and friends or family members) may add to the fund in the future.
- The recommended (minimum) gift amount will depend on the gift’s designated purpose, if any.
- A signed gift agreement between the organization and the donor is required for restricted or designated endowment gifts at or above the minimum gift amount. To ensure that the gift’s purpose remains relevant in the future, include language in the gift agreement such as: “In the event the designated purpose of this gift ceases to exist or becomes impossible, impractical or too difficult to administer at some time in the future, the board of directors retains the right to redirect the funds held in this endowment for a purpose or purposes as similar as possible to the original intent of the donor.”