Donor Bill of Rights

©Brian Werner

To assure that philanthropy merits the respect and trust of the general public, TMLF and other non-profit organizations declare that all donors have the following rights.

Philanthropy is based on voluntary action for the common good. It is a tradition of giving and sharing that is primary to the quality of life. To assure that philanthropy merits the respect and trust of the general public, and that donors and prospective donors can have full confidence in the nonprofit organizations and causes they are asked to support, we declare that all donors have these rights:

I. To be informed of the organization's mission, of the way the organization intends to use donated resources, and of its capacity to use donations effectively for their intended purposes.

II. To be informed of the identity of those serving on the organization's governing board, and to expect the board to exercise prudent judgment in its stewardship responsibilities.

III. To have access to the organization's most recent financial statements.

IV. To be assured their gifts will be used for the purposes for which they were given.

V. To receive appropriate acknowledgement and recognition.

VI. To be assured that information about their donation is handled with respect and with confidentiality to the extent provided by law.

VII. To expect that all relationships with individuals representing organizations of interest to the donor will be professional in nature.

VIII. To be informed whether those seeking donations are volunteers, employees of the organization or hired solicitors.

IX. To have the opportunity for their names to be deleted from mailing lists that an organization may intend to share.

X. To feel free to ask questions when making a donation and to receive prompt, truthful and forthright answers.

The Donor Bill of Rights was created by the American Association of Fund Raising Counsel (AAFRC), Association for Healthcare Philanthropy (AHP), the Association of Fundraising Professionals (AFP), and the Council for Advancement and Support of Education (CASE). It has been endorsed by numerous organizations.

Donor Responsibilities

Total charitable giving across North America exceeded $200 billion in 1999. Fraudulent use of contributions affects less than one percent of all giving. So you can almost always be assured that your generosity will go to work for legitimate causes.
But it pays to be careful.

There are several steps you can take to ensure you are contributing to a legitimate organization.

  • First, read through the Donor Bill of Rights and know what you should expect of a charity when you support it. You should feel confident that you're being treated appropriately when you decide to give.
  • Know the organization you want to support. The more information you have about a group, the better you'll feel about supporting it.
  • Be committed to the organization you're supporting. There are over three-quarters of a million charities across North America. If you're not excited about giving to a particular charity, there's undoubtedly one that fits your views and needs.
  • Take your time when deciding to give. Don't give in to high-pressure appeals. Professional fundraisers will not push you to give immediately — their job is to build relationships with you. If a telephone or door-to-door solicitor starts using such high-pressure tactics, it's time to consider whether or not you should give to that organization.
  • Request information about a charity before you give. This goes along with the above tip on knowing the organization. Sometimes charities have names that sound similar, but they not be affiliated with each other all. Legitimate organizations will provide you with information about its charitable mission and how the contribution will be used. Ask door-to-door and telephone solicitors to identify themselves and name the charity they're working for (Many laws now require them to do this.).
  • Know the difference between "tax-exempt" and "tax-deductible." Some organizations may be tax-exempt, but contributions to them are not tax-deductible. Don't be confused with meaningless terms like "tax I.D. number." Many organizations have such numbers, but it has nothing to do with tax-deductibility.
  • If you use the charitable deduction when determining your taxes, always ask for a receipt showing the amount of the contribution and stating that the contribution was in fact deductible.
  • AFP encourages all individuals to give. Charities and the work they perform are the building blocks of our communities and our society. But donors always the right to say no, regardless of the reason. Make your giving counts and give to an organization you are comfortable with and fully support.

Factors Affecting Fundraising Costs

As the saying goes, sometimes it takes money to make money.

When a donor considers giving to an organization, a top concern is how well the money will be managed: How much does the organization spend raising money, versus using it for the primary fundraising purpose.

Fundraising is a process that has many components, and investments must be made in order to complete the process. Individual components should be evaluated as part of a total development program, and boards of directors of nonprofit organizations should determine a reasonable rate of return on investment for their own organizations based on prior results.

If only three to five percent of the donations from a particular campaign actually go to the cause, donors may want to look elsewhere. On the other hand, it may not be reasonable to expect that 90 percent of the contributions go directly to the cause. Just like for-profit entities, charities have operating expenses.

Here are factors to consider when evaluating an organization's fundraising costs and returns

  • The age of an organization. A well-established organization will likely have a greater return on investment than a newly established nonprofit.
  • The age of the fundraising department. A mature, professionally run development program will be expected to produce a higher return on investment than a newly formed department.
  • The source of funds. Nonprofits that rely heavily on small gifts from individual donors will have higher fundraising costs. In contrast, organizations that receive support from the federal government, corporations, foundations, or large gifts from wealthy donors tend to have lower costs.
  • Different methods used in the fundraising process will produce different returns. For example:
    1) A donor acquisition mailing will have a much lower return on investment than a donor renewal mailing.
    2) A capital campaign will produce a much higher return on investment than an annual fund program.
    3) A newly established planned giving program may have zero return on investment for the first few years.
    4) The return on investment for a special event will be lower than that of a major gifts program.
  • The size of an organization may affect the return on investment.
  • The profile of the constituency. The economic and geographic profile of the constituency being solicited will have an effect on fundraising costs and return on investment.
  • The location of the organization. An organization located in an affluent region of the country should expect a higher return on investment than one located in a less affluent area.
  • The popularity of the cause. The cause and its level of acceptance by the community will affect the return on investment.
  • The competition for funds. Within the community or constituency that the organization is appealing to for support, the competition by other organizations may lower the return on investment.
  • Sometimes, a fundraising campaign may lose money in the short-term but generate significant returns in the long run. The cost of direct mail acquisition (mail solicitations sent to potential new donors) may range anywhere from $1.00 to $1.25 per dollar raised. However, once new donors have been identified, a second mailing to that group may cost only 20 cents per dollar raised. Thus, while the first mailing may not bring in much money, the second mailing should bring in a substantial number of contributions. These newly identified donors may ultimately donate even larger gifts to the nonprofit (e.g., land, stocks, charitable bequests, etc.).

How to Evaluate a Charity

Evaluating a charity, and deciding whether or not you want to give, can be a challenging task. Many potential donors focus on how much the charity spends on its mission, administration, fundraising, and other matters. While these are important questions, here are more general factors to consider.

There is no single source that lists and grades all charities.

There are hundreds of thousands of charitable organizations across North America, and the number has doubled in the past 15 years. Some organizations (such as a Better Business Bureau) may have information on certain local charities, but will have data for only a small fraction of area charities.

Develop a giving plan

Some donors work with brokers, and others consult financial professionals to monitor their earnings and investments. Yet, when it comes to voluntarily giving away money, donors tend to give quickly and often on a whim

Donors should develop a giving plan of how much, when, and to whom they will give. It can be as detailed or as general as they want, but should include an outline of what kinds of organizations they will support (only health-related organizations? Environmental groups? Literacy groups?), approximately how much they can give, and when they can give. In addition, giving more to a few causes also tends to increase the overall value of contributions.

Deciding when to give is also important. More than a third of all charitable giving occurs in the last three months of the year. Donors should be sure to allocate some money to give during that period. But giving during the rest of the year is critical too, as some charities often struggle for funds in spring and summer.

Ask for the right information

What kinds of materials should donors ask for? First, the material should contain an overview of the organization, its mission and its programs. Financial data can also helpful; donors should look at a charity's cost of fundraising, its overall budget, and whether or not it is running a deficit. Ideally, donors should look for signs of consistent and improved management over several years.

Ideally, fundraising costs (which can be quite high for new organizations) should decrease over time. AFP has not created fundraising cost standards for charities because many variables are involved, and each campaign will be unique. For information on the variables that can impact a charity's fundraising campaign, re-visit Factors affecting fundraising costs (Above).

On June 8, 1999, new IRS regulations went into effect requiring charities to distribute their Form 990 to anyone who asks for it. The Form 990 is the financial reporting document that most, but not all, charities are required to complete and file with the IRS. Donors can request a charity's three most recent Forms 990. Those documents should provide an accurate picture of the organization.

Volunteer for an organization

One of the best ways donors can evaluate and feel confident about a charity is to volunteer for an organization. Talking with staff members, other volunteers, and the people the charity serves will give the donor a personal view of the charity's mission and operations. If the donor's impressions are positive, then he or she can feel good about giving to that organization. And of course, if the experience was gratifying, then the donor should consider volunteering on a consistent basis!

Ultimately, giving is a personal decision

Despite fundraising costs, management, and the best-laid plans, charitable giving, at its heart, is a personal decision that donors must make on their own. If the donor truly believes in the organization's mission, then he or she should give to that nonprofit. The guidelines that have been presented here are simply that--guidelines. The real decision lies in each donor's heart.