What Should Nonprofits Do About Anonymous and Controversial Donations?

A nonprofit’s transparency is crucial for building trust with and being accountable to donors. Financial transparency is also, to a varying degree, legally required. Practicing transparency is a must that any nonprofit should follow as a part of its donor stewardship strategy.

Donors deserve to know how their donations are being used to benefit an organization’s mission. They want to understand specific mission needs that are at risk of not being met without the proper funding. Directly sharing information like this provides insights and actionable takeaways for any nonprofit’s supporters.

What should nonprofits do when full transparency isn’t possible, such as when accepting anonymous donations? Or, what happens if an individual wants to donate to an organization, but that person has a less than desirable reputation?

Why Do Donors Choose to Give Anonymously?

There are many above-board reasons why an individual would choose to anonymously donate money to your organization. Here is a short, non-exhaustive list in no particular order:

They don’t want the attention. Some people are humble or shy by nature. Perhaps the people in their lives don’t know the level of disposable income the donor has, and they want to keep it that way.

They don’t want to be solicited by other organizations or too frequently by yours. Major donations get attention. It is common for nonprofits to map relationships with their network to see if they have connections to known major donors. If organizations don’t know who a donor is, that solicitation opportunity doesn’t exist. When a donor marks themselves as anonymous in your system, it should be an indicator that a short list of staff should be directly communicating with that donor.

They want to donate outside of their family or company foundation’s scope. Major donors may be very connected to an established, unwavering set of parameters via a foundation. They may wish to personally give outside of those parameters but cannot be publicly attached.

They don’t want to play favorites. If your anonymous major donor is a company owner or executive leader, they may feel driven to give to an employee’s cause. But, they do not want other employees to feel slighted.

Their connection to your mission is deeply personal and perhaps heartbreaking.  People can give large gifts for deeply personal, private reasons, such as a diagnosis of an acute illness or the devastating death of a loved one. They may never want to talk about it, and that’s absolutely within their rights.

Nonprofits that have faced resistance from donors or heard “no” for any of these reasons, might consider asking the prospective donor if they’d be willing to give anonymously. Walking donors through what that looks like could open up opportunities that were otherwise closed.

Should You Take Every Donation?

Fundraising is hard. There isn’t a reasonable nonprofit professional out there who would disagree. But that doesn’t mean your nonprofit should accept every donation you receive.

Anonymous donations are rarely a non-starter. If they come with unreasonable conditions, an unwillingness for the donor to have any official documentation, impossibly narrow restrictions or other red flags — it may be time to walk away. Not only could any of those scenarios be a short-term hassle, but they could also result in an IRS audit.

If the reasons someone wishes to remain anonymous with their major donation are legitimate, organizations should have no qualms about not only accepting the gift but celebrating it. Even an anonymous donor should be thanked and stewarded, and there might be opportunities to honor their reasons for giving or to leverage their donation as a matching gift for an annual appeal or Giving Tuesday.

Just as nonprofits may have to decline anonymous donations, public donations from controversial figures may have to be returned as well. Not all press is good press. Reporting regulations may mean that even if a nonprofit doesn’t publicize a less than scrupulous donor, people will inevitably find out.

A good rule of thumb for a donor development team is if they spend more time trying to talk themselves into accepting a major donation as opposed to brainstorming creative ways to publicize it, the donation likely shouldn’t be accepted.

Everyone has a different threshold for what makes someone a controversial figure. There is no denying that public opinion and perceived reputation matter, perhaps more than the individual opinions of staff.

Returning a donation brings its own set of bad press, too. So, it is important to do so openly with a statement from leadership that is true to your organization’s mission and vision.

Transparency and integrity are paramount to the long-term fundraising success and viability of donor relationships at any nonprofit.  Being thoughtful when accepting anonymous donations and evaluating major individual donors will only benefit a nonprofit’s cause and community.