Why should Nonprofits tell potential donours how funds are spent?

Informing potential donours about the specific use of funds in a fundraising campaign is crucial for transparency, accountability, donour engagement, and the campaign’s success in achieving its goals.  A fundraising campaign will be used for several reasons.

Information is Crucial

Here are five reasons why Nonprofits should inform donours what will happen with their funds:

Transparency and Trust 

Clearly stating how the funds will be used fosters transparency, essential for building trust.  Donours who understand where their money is going are more likely to feel confident supporting the cause.

Accountability

Providing information on how funds will be used holds the fundraising organisation accountable for its actions.  Donours want assurance that their contributions will be used effectively and for the intended purpose.  The organisation can be held accountable for delivering its promises by outlining specific fund uses.

Alignment with Donour Values  

Different donours may have specific causes or aspects of a campaign that resonate with them.  By detailing how funds will be used, the nonprofit can attract donours whose values align with the intended use of the funds.  This increases the likelihood of securing donations from individuals who are passionate about the cause.

Impact Assessment

Knowing how funds will be used allows donours to assess the potential impact of their contributions.  Donours want to make a difference and see tangible results from their donations.  Precise information on fund usage enables donours to evaluate the effectiveness of the organisation’s initiatives and make informed decisions about supporting the cause.

The Magic 35%

Donours often require that 100 % of donations be used for the cause.  However, it is essential to remember that nonprofits have operational costs.  How much of your budget can be allocated to operational expenses?  Donour organisations understand that present programmes cost money.  They also understand that fundraising for a cause should be reasonable.  The general guideline is no more than 35%.  It is vital to be accountable for how that 35% is spent.

A Last Word

In summary, transparency involves clear and open communication, accountability entails taking responsibility for actions and resources, and donour engagement fosters meaningful relationships and involvement with supporters.  These principles are essential for building trust, credibility, and long-term support in fundraising efforts.  After all, nonprofits need donour retention to ensure financial sustainability for the organisation.

Read more about donour retention here:  https://www.constantcontact.com/blog/donor-retention-strategies/