Generally, nonprofit organizations receive their funding from three main sources:
Each of these categories offers something a little different. We’re going to break each one down and discuss the main types of nonprofit donations that each one supplies.
Individuals are often what most people think of when they say “donors” or think about “donations.” And for good reason! 72% of all charitable contributions come from individuals.
Here are the types of donations that individual people often make to nonprofit organizations.
Donating online is one of the easiest ways for individuals to give to their favorite nonprofit. They don’t have to write a check or pull out cash; they simply fill in the credit card and personal information. The whole process generally takes no more than a few seconds.
Online donations are a great way for donors to give easily and efficiently. If your nonprofit has an online donation form, make sure that your donors know about it and can access it quickly. You won’t be able to collect those online contributions if your supporters don’t know where to find the form!
To take online giving a step further, let’s look at mobile donations.
Mobile giving is the shiny new toy in the nonprofit world. With traditional online donations, supporters can only make contributions when they’re on their laptops or desktops.
But with mobile giving, they’re able to donate anywhere they want from their smartphone, tablet, or other mobile devices.
Part of what makes mobile fundraising so successful is its adaptability. If a donor wants to show her support on her tablet, she can. If another wants to donate on an iPhone, that can happen, too.
If your online donation forms are mobile responsive, you’ll be able to bring in more revenue via mobile donations!
Another way that donors can show their support on their phones is through text fundraising. Like mobile donations, text fundraising allows individuals to give on the go.
Donors simply text a short phrase to a specific number and then receive a text message directing them to a streamlined online donation page.
It’s a simple, effective, and easy way for individuals to give to their favorite causes.
Monthly or Recurring Donations
Individuals who are committed to helping your organization achieve its mission may want to support you on a more regular basis.
Enter recurring gifts!
Monthly or recurring giving is a great option for individuals who want to do more than just write a single check or make one online donation. They can be manual (i.e., a donor gives whatever they choose each month) or automatic (i.e., a donor sets up recurring donations on an online donation form and the money is debited from their account each month).
Make sure your donors know about monthly or recurring giving as an option to continually support your organization!
If you’re looking for donation tools with monthly or recurring gift features, check out our list of top recommended nonprofit software.
While raising money at events isn’t the easiest way for nonprofits to generate revenue, they can be excellent opportunities for your donors to get to know one another and your organization better.
Whether you host a fancy gala, a family fun day, or a traditional walk-a-thon, a fundraising event is just another way for your nonprofit to raise money. The funds can either be raised beforehand with peer-to-peer, with ticket sales, or during the event itself!
Direct mail is probably the most traditional and time-tested form of nonprofit donations. It usually involves sending out appeal letters to donors and including an envelope for them to mail their checks in.
While direct mail is not as popular as it once was, that doesn’t mean your organization should discount it as a way to raise more money. Many donors still prefer the tangible aspect that comes along with direct mail fundraising. Individuals who are hesitant about putting in their information on an online donation form often turn to direct mail as an alternative.
Your organization probably shouldn’t send out direct mail appeals to every single one of your donors (stamps are expensive these days!), but rather consider using direct mail as a way to raise money from your less tech-savvy supporters and major donors.
Pledges are nonprofit donations that individuals agree to make over the course of several months or years.
They are used by donors who want to give a substantial amount of money but are unable to give the entire sum in one payment. Instead, these supporters give the money to an organization over time. Pledges are similar to monthly or recurring donations, but the difference is in the communication to the nonprofit.
A donor who wants to make a pledge normally lets the organization know in advance with a pledge card or letter. The expectation is that the donations will be made regularly until the pledge is fulfilled.
With monthly or recurring donations, there is no expectation that the donations will continue to be made. A donor can give regularly for months or even years, but the organization should not presume that those donations are guaranteed.
Admittedly, many people don’t think of volunteers’ time as a form of donation. But when you consider the amount of work and effort that many volunteers offer to organizations, it’s hard not to see them as donors of sorts.
Volunteers may already contribute monetarily or they may just give their time and energy. Either way, your organization shouldn’t count out volunteers when you tally up the types of donations that you receive.
Planned donations are contributions that are made in the future but are prepared for in the present. Donors who wish to give to an organization with a planned gift often express that preference in their wills or bequests.
Nonprofits often know if they are going to receive a planned gift well in advance. Normally, the donor will express his or her preference and will have conversations with the organization prior to solidifying the donation in their will or bequest.
Sometimes, however, the only indication that a planned gift will be made is a donor’s past giving or involvement with the organization.
Planned gifts are often quite sizable and come from individuals that have close ties with your nonprofit. The donor could either be a past supporter or volunteer or might be a recipient of your organization’s services.
Major gifts are, well, major!
Besides planned donations, major gifts are often the biggest contributions that a nonprofit will receive. However, the definition of a major gift will likely differ from organization to organization.
Major gift solicitation is much different than “regular” donation appeals. They require much more personal attention, and rightly so! An individual who has decided to donate a large sum of money is unlikely to do so without having at least a few in-depth conversations with members of the nonprofit’s staff.
Make sure that your nonprofit has a well-developed major gifts strategy so that you can start receiving those donations sooner rather than later!
An annual campaign is often known as the “bread and butter” or the “backbone” of nonprofit fundraising. It essentially helps an organization establish relationships with donors in order to solicit gifts from them on an annual basis (thus, the name!).
For this type of nonprofit donation, a nonprofit must solicit donations from new prospects as well as established supporters. It involves the coordination of multiple departments and the cooperation of an entire fundraising team.
Even though corporations themselves are composed of individuals, they have their own way of giving back to charitable organizations. Securing corporate donations or even sponsorships starts with knowing exactly what kind of support to ask for.
Once you’ve determined that, it’s time to make your solicitation with calls, meetings, or sponsorship request letters.
Let’s look at the different types of nonprofit donations that come from companies!
Many companies will offer grants to eligible nonprofits at various levels ranging from local to international.
The application process is often time-consuming, but these corporate grants can be well worth the work. Companies are willing to demonstrate their corporate social responsibility (CSR), and one of the easiest ways for them to do so is to award grants to eligible nonprofits that apply.
Another way companies demonstrate their CSR initiatives is by matching their employees’ gifts.
Granted, not every company will match employee donations, but those that do can be a valuable source of funds for your nonprofit.
Essentially, when an employee makes a donation to your organization, they can submit a matching gift request to the company’s HR department. Then, the company will typically match their employee’s gift at 1:1 ratio.
The matching funds are released after the paperwork is cleared and your nonprofit verifies the original donation. It’s an easy way to potentially raise twice as much money without asking your donors to open their wallets a second time.
Volunteer grants are matching gifts’ distant cousins in the corporate giving world. They reward employees who donate their time to eligible nonprofits. Volunteer grants can either be awarded to individuals or teams of volunteers.
While they are less common than matching gift programs, volunteer grant programs are still excellent ways for your nonprofit’s volunteers to bring in a little extra money for your organization.
In the case of both volunteer grants and matching gifts, many employees are not aware that their employers offer such programs. Your nonprofit can market these corporate giving programs to your donors and volunteers to increase the chances that they will submit those requests after they give their money and time.
Here are some common promotion strategies that work well for volunteer grants, matching gifts, and other types of corporate giving programs:
- Including information in your welcoming letters and emails.
- Promoting corporate giving programs at events.
- Using a newsletter to highlight volunteer grants.
- Posting updates on social media about corporate giving.
- Dedicating a page on your website to explaining volunteer grants.
Technically, payroll deductions come out of an individual employee’s paycheck, but they are corporate giving programs that companies offer as easy ways for workers to donate to a nonprofit.
Companies often have a select number or type of nonprofits that they approve of for employee payroll deductions. The easiest way to start receiving payroll deductions from donors is to get in touch with a company whose goals most closely align with yours.
Companies who don’t wish to donate money to a nonprofit may offer in-kind donations of some sort.
In-kind donations are contributions of time, services, or goods that a company can provide. For instance, if your nonprofit is hosting a gala, you might be able to receive in-kind donations of food, drinks, or decorations from local companies.
Charity auction items are another instance of common in-kind donations. Local businesses or individuals will donate items that auction attendees then bid on.
These items can range from art to travel packages to gift baskets and more!
If your nonprofit is looking for items for its next silent, live, or online auction, you’ll definitely need to solicit in-kind donations!
Foundations are the final category of types of nonprofit donations that we will discuss here. There are a few types of foundations that we’ll outline to help you distinguish between the types of funding each category offers nonprofits.
Community foundations are often defined by the region they serve. They will typically only award grants to nonprofits located within their specified area.
Many community foundations will have different types of grants that can be awarded to particular charitable organizations. Additionally, some grants require outreach on the part of the nonprofit while others are awarded at the discretion of the foundation itself.
Community foundations can distribute grants of any size for any purpose. Some of these purposes include:
- Buildings and renovations
- Emergency funds
- Land acquisition
- Annual funds
- And more!
Private foundations operate much the way community foundations do, the difference being in where the donated money comes from.
Community foundations rely on the pooling of resources while private foundations are funded by a single person or family (one of the most notable being the Bill and Melinda Gates Foundation).
These private foundations award grants to specific nonprofits according to their guidelines and discretion. Some will only award grants to one type of organization while others will offer money to a broad range of nonprofits.
The application process takes time and effort, but if your nonprofit can receive grant money from a private foundation, it is well worth the effort.
To round out the foundation category, we’ll briefly touch on corporate foundations.
These types of foundations are often linked to the parent company but are, for tax purposes, considered separate and independent entities.
They are subject to the same rules and regulations that govern independent foundations. Learn more about asking for donations from foundations!
And there you have it! Hope you enjoyed learning about all the different types of nonprofit donations.