Transparency is a huge topic in the nonprofit sphere. Many people want nonprofits to share where they are getting their donations and what they are doing with the money.
Although nonprofits are among the most trusted U.S. institutions, for instance, only 56 per cent of surveyed Americans had ‘high trust’ in nonprofits in 2022 — a 6 per cent decline from 2020. With the conversation of trust and transparency also comes the topic of confidentiality and how nonprofits should navigate that conversation with donors.
Why do some nonprofit donors want to be anonymous?
First, let’s try to understand why nonprofit donors may want to advocate for their privacy, as some may prefer to keep their personal information locked away and not have it shared or used for marketing purposes:
Political or controversial causes. Some donors may prefer to give anonymously if the cause they are supporting is politically or socially controversial.
Tax reasons. Some donors may prefer to remain anonymous to avoid tax implications or other legal issues that may arise from their donation.
Avoiding the appearance of influence peddling. Some donors, particularly high-profile ones, may prefer to remain anonymous to avoid the appearance of attempting to influence the organization or its decision-making.
What are the pros and cons of donor anonymity for a nonprofit?
The reasons for donors to remain anonymous are understandable, but what are the benefits for a nonprofit and why should they push back against transparency for the sake of their donors?
Increased donations. Anonymous donations can increase the total number of donations received, as some people may be more willing to give if they can do so anonymously.
Build rapport with donors. By honouring a donor’s request for anonymity, your relationship with them will be strengthened.
Gauge authenticity. Anonymous donors often care more about the cause than the recognition and while this is not a surefire way to test authenticity, it could be a key indicator.
Meanwhile, the cons of donor anonymity for a nonprofit include:
Public distrust. Anonymous donations can make people more sceptical of your institution as a whole, as you cannot publicly display where the money is coming from and why.
Missed opportunities for community building. Anonymous donations can make it difficult for the organization to acknowledge or thank the donors, or to build a sense of community around the organization.
As you can see, there are both pros and cons of allowing donors to give anonymously. It will ultimately be up to your nonprofit to decide what is right for your organization. Here are some strategies to help you decide:
- Develop a clear and transparent donation policy. Nonprofits should outline how anonymous donations will be accepted, handled, and used in clear, transparent language. This will help ensure that anonymous donations are used for their intended purpose and that the organization is in compliance with any applicable laws and regulations.
- Assess legal and tax implications. Nonprofits should consult with legal and tax experts to understand any implications that accepting anonymous donations may have on their organization. This will ensure that the organization is in compliance with any laws and regulations, and that anonymous donations are not disqualified from any tax deductions.
- Track and evaluate the effectiveness of anonymous donations. Tracking the total number of anonymous donations received, the total amount donated, and the impact of those donations on the organization’s mission are good benchmarks to establish. This will help the organization determine whether accepting anonymous donations is a viable fundraising strategy.
Nonprofit organizations have the right to choose if they want to accept anonymous donations or not. Furthermore, donors should have the right to make their donations anonymous, and they should also have the right to opt out of future fundraising efforts, including having their names, addresses, and phone numbers removed from your organization’s contact lists. Navigating this can be tricky, but by using the strategies listed above, you are bound to make the right choice.
Kevin Xu is the CEO of MEBO International, a California- and Beijing-based intellectual property management company specializing in applied health systems. He also leads Skingenix, which specializes in skin organ regeneration and the research and development of botanical drug products. Kevin is co-founder of the Human Heritage Project.