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Best Practices of Donating to Nonprofits

March 14, 2016 7:29 PM | Deleted user

With Arizona Gives Day coming increasingly fast, many people are wondering what their donation dollars even do and how their donations will be utilized to their fullest effects. There are many types of donors, but we’re first going to focus on the question: why donate?


There are many advantages for you to donate to your favorite nonprofit, on both a personal level as well as for the nonprofit in general. By donating, you are helping out that nonprofit stay afloat and therefore helping others receive the services they need. You may not have time in your day to  volunteer -- that is perfectly fine! Donations can help in a multitude of ways. For example, by donating to the Arizona Coalition to End Homelessness, your donations can go to a multitude of places! Donations help with the Arizona Veteran StandDown Alliance, funding our statewide trainings to help service providers learn best practices on ending homelessness, our annual conference along with many other opportunities. As we all very well know, nonprofits rely heavily on donations. What most people don’t know, however, is the fact that every little bit counts. Think about it -- if, let’s say, 50 people wanted to donate $10 that’s already $500! Every single person who donates, whether it be large sums of money or smaller ones, makes an impact on the work we do in some capacity.


On a personal level, when we donate to most nonprofits, or 501(c)(3)s, we get money taken off of our taxes. This is called a charitable tax credit, which provides a credit towards how much you must pay in taxes. In the case of charitable tax credits, you may donate up to $200 if you are filing as a single person or you may donate up to $400 as a married person filing jointly in order to get this tax credit. Pretty cool, right? In all actuality, you aren’t spending a dime!


The final point I’d like to touch on is the ever-common restricted funding. Restricted funding is the act of funding an organization and saying they can only use your money for certain projects. As pointed out by Vu Le, one of AZCEH’s keynotes from last year’s conference and author of the blog Nonprofit With Balls, in one of his blog posts titled “The Myth of Double-Dipping and the Destructiveness of Restricted Funding”, restricted funding takes away from the actual work, it prevents innovation, it wastes time and burns people out. “You are supporting everything,” Vu notes. “We don’t have separate accounts for just your funds. Your money goes into one bank account, like water into one bucket, from which we nourish the beautiful flowers of justice. It’s all mixed. Accounting can tell you that yes, the 3 ounces of water you gave supported just the tulips of programming and not the disgusting weeds of admin and fundraising, but come on, since the water is all mixed together, every plant got a bit of your funding.”


So, let’s say, you’re a funder for AZCEH and you would like to donate purely to the annual Maricopa County StandDown. This is problematic because many people don’t realize how much actually goes into this event. StandDown requires a lot of time and planning, done by a staff members who must be paid, paper to post signs throughout the venue, ink to print those signs, office space to plan the event as well as electricity and water, along with so much more. While yes, all donations are graciously accepted, please recognize the effects of not providing general operating funds.


With all of that said, take note of what Vu points out in his post. “Provide general operating funds: This is the most effective form of funding, and the most efficient, and also the most equitable. Give nonprofits the flexibility to focus on outcomes and results. If all funders give general operating funds and focus on outcomes, it would save hundreds of thousands of hours that could be put to better use providing services. It may also, honestly, prevent a lot of us from rage-quitting the sector.”


We hope you realize the impact of what you are able to do with just funding alone. You don’t always have to volunteer to make an impact on your community!


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