Funding

Your income is almost certainly more varied than the word "fundraising" suggests. Most organizations run some mix of individual gifts, grants from foundations or government, earned revenue from programmes and services, and corporate support.

The mix matters more than the total. An organization living on one source is one decision away from a crisis, and that decision is usually made by somebody else.

What you owe a donor in writing

This one has a hard number attached, and it catches people out every year.

A donor can only deduct a contribution of $250 or more if they hold a written acknowledgement from you. The threshold applies per contribution, not per year. Twelve monthly gifts of $30 do not trigger it. A single gift of $250 does.

The acknowledgement must state the amount, and it must say whether you provided anything in return and what that was worth. If a $500 gala ticket included a dinner worth $75, the letter has to say so, because only $425 is deductible. Get that wrong and you have handed your donor a document that will not survive their accountant.

Timing matters too. The donor needs it by the earlier of the date they file their return or the filing deadline, which means a January letter covering the previous year is cutting it fine for anyone who files early.

Strictly, the obligation to obtain the acknowledgement sits with the donor. The relationship sits with you, which is why organizations that send these promptly and accurately retain donors longer than those treating it as paperwork.

What it costs you to collect money

Every route from a card to your bank account takes a percentage and a flat fee, and fundraising platforms frequently add a platform fee on top of the processor's.

The flat fee is the part people underestimate. A route with a lower percentage and a higher fixed fee is cheaper on large gifts and more expensive on small ones. On a $15 donation the difference between the best and worst common option is over a dollar, which across a few thousand small gifts is a staff day.

Optimise for your typical gift, not your average one and not your largest. If most of your donations are $25, what happens at $500 is irrelevant to you.

Our donation fee calculator works this out for any gift size, free and without an email address.

One catch worth knowing before you budget: the discounted nonprofit processing rates are not automatic. Stripe requires that at least 80% of your card volume is tax-deductible donations, which organizations with significant earned revenue often fail. PayPal requires confirmed 501(c)(3) status through its own verification. Apply before you assume the lower rate.

Grants are a different discipline

Grant funding is not fundraising with more paperwork. It runs on a different cycle, rewards different evidence, and usually arrives restricted to a specific purpose with reporting obligations attached.

The trap is arithmetic. Restricted money that does not cover the cost of administering it leaves you busier and no better off. A $40,000 programme grant that funds no overhead, requires quarterly reporting and a final evaluation, can consume more staff capacity than it buys.

This is why unrestricted giving is worth more per dollar than its size suggests, and why an organization funded entirely by restricted grants can look healthy on paper while being unable to pay for its own bookkeeping.

Recurring giving changes the arithmetic

A donor giving $20 a month is worth more than one giving $240 once, even though the totals match. The income is predictable enough to plan against, retention is materially higher, and it removes the annual scramble.

It also lowers your acknowledgement burden, since monthly gifts under $250 do not each require written substantiation.

What we are writing next

Acknowledgement and receipt letters with templates that satisfy the substantiation rules, donation platforms compared on published fees, finding grants you are genuinely eligible for, and corporate matching programmes.

Where nonprofit money comes from

The column that matters most is the second one. Restricted money that does not cover the cost of administering it leaves you busier and no better off, which is why unrestricted giving is worth more per dollar than its size suggests.

An organization funded entirely by restricted grants can look healthy on paper while being unable to pay for its own bookkeeping.

The one deadline in this subject

A donor can only deduct a contribution of $250 or more if they hold a written acknowledgement from you, and they need it by the earlier of the date they file their return or the filing deadline.

The threshold is per contribution, not per year. Twelve monthly gifts of $30 do not trigger it. A single gift of $250 does. Get the letter wrong, or send it in February to someone who filed in January, and you have handed your donor a problem.

Work out what collecting money actually costs you with the donation fee calculator.

Reference information, not legal or tax advice. Substantiation rules are federal and specific. IRS Publication 1771 is the authoritative source.