6 Ethical Fundraising Best Practices for Major Gifts

Ethics guidelines will help your organization attract and retain both donors and staff. Here are 6 best practices for ethical major gifts fundraising.

When it comes to major gifts fundraising, nonprofit organizations must adhere to ethical guidelines to build trust and maintain strong relationships with donors. In fact, operating from an ethical place may even attract more donors to your organization, as they’ll appreciate the way you go about your mission. 

There are several ways you can communicate to donors that your nonprofit maintains high ethics. You’ll want to formalize these approaches in your nonprofit’s standard operating procedures so all staff have access to them and can help your organization abide by them. Below, we’ll cover six best practices to ensure ethical fundraising for major gifts.

1. Abide by a Code of Ethics

The Association of Fundraising Professionals (AFP) provides valuable ethical fundraising guidelines that nonprofits should consider, including a detailed Code of Ethical Standards. The goal of these principles is to standardize high ethical fundraising across the philanthropy sector. In doing so, AFP aims to preserve and enhance the work that charities do. 

Familiarize yourself with the AFP’s standards and ask your major gifts fundraising team to commit to the code. Doing so ensures transparency, honesty, and accountability in your fundraising efforts. In AFP’s code, you’ll find various ethical rules to observe in the following categories:

  • Public trust, transparency, and conflicts of interest
  • Solicitation and stewardship of philanthropic funds
  • Treatment of confidential and proprietary information
  • Compensations, bonuses, and finder’s fees

The remaining best practices in this list all relate back to this thorough guide.

2. Maintain Donor Trust

Donor trust is crucial for successful fundraising. There are several ways to communicate that donors can trust your nonprofit, such as:

  • Expressing appreciation and reporting on impact
  • Keeping your organization transparent
  • Using consistent and clear branding
  • Ensuring your donor services are user-friendly

AFP also publishes a Donor Bill of Rights that includes ten things every donor should have when interacting with a nonprofit. These cover everything from donors being informed about your nonprofit's mission to being allowed to opt-out of mailing lists and otherwise manage their data. You can get a jumpstart on building donor trust by following these ten rules.

Overall, you want to ensure that your nonprofit uses donors’ contributions effectively and fulfills its promises. Transparency and clear communication about how you use donations will help build and maintain trust.

3. Practice Responsible Stewardship

Donor stewardship is the process of cultivating supporters into first-time donors and then continuing to engage them with your work. Stewarding major donors comes with some expenses. For example, you might take a major donor out to lunch to tell them about your new project and ask for a donation. However, donors want to see that you’re maintaining a responsible and efficient budget for your stewardship activities.

Practicing responsible stewardship by being mindful of how and when you take on expenses ultimately shows donors that you’re using their funds effectively. Implement strong financial management practices and ensure that funds are allocated according to donors’ intentions. There are many low-cost fundraising strategies you can employ, even for major donors. 

4. Ensure Donor Privacy and Data Protection

As you build relationships with major donors, you’ll need to store information you learn about their interests, giving capacity, community connections, and more. With this comes the responsibility of protecting that data. Ethical fundraising requires that you respect donor privacy and protect their personal information. 

Comply with data protection regulations and ensure that donor data is securely stored and used only for the intended purposes. You can work with your IT department to ensure that you:

  • Keep your software updated and secure
  • Maintain a secure payment processor, website, and other tools
  • Use strong passwords
  • Implement protocols for working remotely and using mobile devices
  • Install anti-virus protection
  • Set up secure Wi-Fi
  • Educate staff on suspicious emails and other cybersecurity threats
  • Establish controls on who has access to which data
  • Dispose of data you no longer need in a secure fashion

5. Avoid Conflicts of Interest

Conflicts of interest can compromise the trust and confidence of your major donors. Maintain integrity by disclosing any potential conflicts and ensuring that fundraising decisions are made in the best interest of your nonprofit and its mission. 

Some practices to help avoid conflicts of interest include:

  • Not exploiting your relationships with donors, prospects, volunteers, contractors, beneficiaries, or employees
  • Complying with all applicable local, state, and federal laws
  • Respecting personal and professional boundaries 
  • Presenting and supplying services honestly 
  • Establishing clear contracts without preferential treatment for certain parties

Have written policies and procedures for all staff and board members to follow regarding the identification and resolution of potential conflicts of interest.

6. Honor Donor Intent

Some major donors may gift your nonprofit unrestricted funds, meaning you’re free to allocate the money to whatever your organization needs most. However, many provide large gifts for specific projects. It’s crucial in these cases to respect and honor the intentions of major donors regarding the use of their contributions. 

Ensure that funds are allocated as specified by the donor and provide regular updates on how their support is making a difference. Even if a donor has provided unrestricted funds, let them know how you’re using them and ask if they have any questions. Additionally, if you find that a major donor’s funds would be better used in another way, have a conversation with them to see if they’d be open to shifting their allocation. Never make assumptions. 

Maintain High Ethical Standards for Major Gifts Fundraising

By following these ethical fundraising best practices, nonprofit fundraisers and major gifts officers can build strong relationships with donors, maintain their trust, and ensure the long-term success of their fundraising efforts. Remember, ethical fundraising is not only a legal and regulatory requirement but also a fundamental aspect of building a sustainable and impactful nonprofit organization.

Instil can help you maintain high ethical standards with your major gifts fundraising by keeping your data organized and secure. Reach out to the Instil team today through our website for questions, demos, and educational materials.

Similar posts