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How Year-End Contribution Statements Can Raise Money

It’s one of those administrative tasks that must be done every year:  mailing your donors a year-end statement of their contributions.  Even if you are receipting on a per gift basis, a year-end itemized report is a best practice that should be adopted.  If you are already doing that, good for you!  But let me ask you this…

Is your year-end donation letter making money for you?

Have you noticed that some nonprofits are still doing fairly well in this economy, even thriving, while others have suffered dramatically?  What do they know that you don’t?  While there are many contributing factors that underlie success in fundraising, I submit that the most important element is effective communication.  One of the best places to communicate is in your receipting to donors.

So, what should an effective year-end letter look like?

If your organization’s year-end statement looks like that sent by most nonprofits, it is a report automatically generated from your contribution management software.  Maybe it is a mail merge letter from a spreadsheet list of donations.  Hopefully it includes the correct information necessary for tax deductibility for the donor:  list of donations by date and whether or not goods or services were received by the donor in exchange for the gift.  While that certainly meets the threshold of providing an annual giving summary, it falls far short of being an effective tool for future fundraising.

A great year-end statement should tell your organization’s story.  Obviously, you should include the list of donations.  But before you get to the boring part, tell your donors what their gifts helped accomplish last year.  Thank them genuinely and profusely.  Let them know that they share credit for anything and everything that your nonprofit has been able to do.  But don’t stop there!  What is your vision for this year?  Share it.  Cast vision.  It is not a bad thing to ask your supporters to give toward your organization’s needs.  It is a better thing, however, to ask your supporters to give toward accomplishing your mission.  Something about what you are doing inspired them to give in the past.  Now give them a reason to give again.  And, do not neglect to ask for more support.  Provide them a pre-addressed, postage paid envelope.  Will it cost you money to do that?  Sure it will.  But, I guarantee you that failing to spend 44¢ on a stamp will cost you a lot more than 44¢!

I have said this in numerous posts during the past year:  You must be strategic to survive this economy.  But I believe you can thrive if you put in place deliberate strategies that the most successful nonprofits employ in any economy.

Here’s to a great 2010 for all of us!

Greg McRay, EA

Greg McRay is the founder and CEO of The Foundation Group. He is registered with the IRS as an Enrolled Agent and specializes in 501(c)(3) and other tax exemption issues.

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