Nonprofit fundraising tools can be excellent resources for assisting organizations in maintaining compliance. However, anyone considering these platforms should know a few things to stay on the right track and avoid issues.
Organizations must protect donors’ privacy
When a nonprofit’s staff members know details about donors’ sexual orientation, income, race, age and ethnicity, it’s easier to target messages, develop impactful campaigns and follow up with parties about future contributions.
However, asking for those details is a relatively new practice for many organizations. Some donors feel awkward being asked about those details, especially if they don’t know why nonprofits request it. It’s also critical that nonprofit workers never assume specifics about donors based on the relatively few details available.
For example, providing ongoing support to LGBT+ organizations doesn’t necessarily mean a donor is queer themselves. Various factors could compel them to support these nonprofits without being part of the marginalized group the organization serves.
Set the foundation for better results by carefully studying what your state or country requires regarding storing donor data and keeping it safe. Then, tell your donors what information you’d like and how your organization will use it. Be as specific as possible about how additional donor information will make it easier for the nonprofit to operate more effectively and achieve better results for service users and stakeholders.
Consider creating a website section to explain the applicable data compliance requirements, whether related to stored information or content in transit. Then, stipulate how your nonprofit meets or exceeds what regulators require. Doing those things will build donors’ trust, increasing the chances they’ll provide more specific details instead of choosing “prefer not to say” when discussing their demographics.
Learning about location-based specifics prevents pitfalls
What constitutes compliance can vary significantly depending on where a nonprofit operates and the source of its donations. For example, some states require nonprofits to periodically file paperwork to retain a tax-exempt status, whereas others don’t mandate further action after initially filing for it.
Then, no matter whether a nonprofit raises funds in the U.S. or abroad, there will almost always be at least two sets of requirements to consider. For example, the U.S. has both federal and state requirements.
Then, the European Union enforces stipulations applying to all member states. However, each member state can also have compliance requirements only relating to that country — as long as the member state’s mandates do not conflict with EU laws.
Many fundraising platforms operate in the cloud, making it easy to use them around the world and see the same database information from any location. However, before nonprofit representatives buy fundraising tools, they should verify with sales representatives that the chosen solutions comply with all applicable compliance requirements.
Compliance supports smooth, above-board operations
Many donors understandably want to know where their money goes if they decide to part with it. It’s hard to be enthusiastic about a charity’s work if the people who donated funds learn that more resources go to administrative and overhead costs than the service users who need assistance. When they ask how the funds get spent, fundraising software that supports compliance can aid nonprofit workers in providing prompt, accurate answers.
Many compliance-centered fundraising software products allow users to run reports, track statistics and see how trends change over time. Such details can help people identify which factors make donors more or less likely to give.
They’ll likely be more generous if they know the nonprofit stays in compliance by doing everything according to regulations. However, as a 2022 study showed, nonprofit giving extends beyond money. The results indicated donors would rather give their time to organizations instead of donating funds.
A closer look revealed it was because such situations increase donors’ perception of control. Consider if someone spends two hours per week serving meals at a soup kitchen. Then, they can see the direct impact of those efforts. Conversely, the outcomes are harder to quantify if someone chooses to give $20 per month to the organization and never receives concrete details about how the nonprofit used the money.
The ideal scenario is one where donors trust that nonprofits operate according to compliance requirements and are transparent about the usage of funds. Fundraising software can help those things happen.
Are you ready to purchase fundraising software?
Fundraising software can save nonprofits time, increasing the effective use of human resources and boosting service user outcomes. Choosing a platform that simultaneously supports compliance will help nonprofit workers make the most of whichever tool they choose.
