Have You: Created Flexible Fundraising Appeals?

Organization’s have to have “flex room.” It shouldn’t give donors a “we may use this to buy miniature ponies but probably not” vibe but should create space for an organization to move around if plans change.

In going through some of my previous posts I noticed when I talk about organizations binding themselves its always in the context of business contracts. Purchase orders, vendor agreements and the like. But there are so many other ways organizations can accidentally bind themselves and around this time of year the most dangerous way is in fundraising appeals. 

As an example, if a mailer says funds raised go toward a schnazzy new building, funds raised in response to that mailer may be considered “restricted” to use for the schnazzy new building. Now, if you meant to say “funds raised go toward a schnazzy new building UNNNLLLLLESSSS the building can’t or won’t be built in which case funds will be used elsewhere in the organization” then that needs to be clear on the mailer where the appeal appears (trying saying that three times). 

Let’s say the purpose did become impossible, be it the site is lost, there are financial issues or a minor apocalypse. What happens next? Well, much of that depends on the type of gift made and State involved among other things. Some States might require a court order to use  the funds for a different purpose. Others may require written permission from the donor or worst case that the funds be returned.

Organization’s have to have “flex room.” It shouldn’t give donors a “we may use this to buy miniature ponies but probably not” vibe but should create space for an organization to move around if plans change. 

Many organizations simply state where funds can’t be used for the purposes intended, they will be used for similar purposes within the organization at the Board’s discretion. Some choose to refrain from making mass specific appeals and instead keep mass appeals very generic.  Which direction your organization chooses to go largely depends on its resources and administrative capacity.

This type of flexibility is important not only for mailers, but letters and agreements the organization signs with donors. And it would apply to all kinds of appeals, not just those for a capital campaign.In fact, where I”ve seen this happen most is where money is raised for a specific program. 

But note, the disclaimer isn’t intended to create an “out” just “room.” There is a difference. Funds must be used to further the organization’s mission or it runs the risk of being accused of deceptive trade practices,  private inurement or violation of a States codes. 

Here are two great resources that may help with understanding the topic:

Protecting Yourself Against a Donor Lawsuit

Avoiding Difficult Conversations with State Attorneys General: The Fundamentals of Charitable Gift Administration

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