The Importance of a Fundraising Policy

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Effective governance of a nonprofit requires care and consistency. Especially as an organization’s team grows, having policies in place to guide staff in a broad range of matters is a good way to ensure that management’s decisions are reflected in the day-to-day activity of the organization. This is especially true of fundraising. Every nonprofit needs to codify its fundraising practices. There are several reasons why this is true:

  • Consistent messaging. Potential donors should be hearing the same message from everyone in the organization. If different people give different ideas about what the organization plans to do, a donor may come away thinking that it is disorganized.
  • Ensuring compliance with tax rules. Organizations should avoid giving donors any tax advice. Making the wrong promises to donors can be disastrous. A fundraising policy can guide staff on the appropriate limits of what they can say regarding the tax treatment of a donation.
  • Keeping control over fundraising efforts. An organization’s leadership may decide to keep a tight leash over how fundraising is conducted. In the absence of a clear policy, a staff member or volunteer may branch out into strategies that have not been adequately studied.
  • Ensuring ethical practices. A nonprofit needs to maintain scrupulous ethical standards to preserve good relationships with donors. A policy provides clear guidance to staff on how to avoid ethical problems.
  • Mechanisms for resolving problems. A fundraising policy can provide staff with a roadmap for resolving problems. This can be especially important if the problem relates to a donor or potential donor, but it can also apply to cases where staff have concerns that they don’t know how to address themselves. Absent such a policy, a staff member may try to improvise a solution, or put a manager in a similar position. Staff should know when to escalate problems, and the board should determine when it wants to know about issues so it can be a part of solving them.

The Church Law Center of California supports secular and religious nonprofits in all aspects of their governance. We can help your organization craft sound, practical fundraising policies. Call us today at (949) 892-1221 or reach out to us through our contact page.

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