What Donors Want to Know Before They Give
The world of nonprofit funding is competitive, and organizations must recognize a fundamental truth: Donors aren’t simply giving away free money. Rather, they view their contributions as investments that demand accountability and measurable results. Whether reporting to your Board of Directors or funders, you must demonstrate responsible stewardship of every dollar received.
The funding landscape is characterized by scarcity, with far more applicants than available resources. There are always more applicants than there is money.
This reality underscores a crucial point that many nonprofits overlook: Funders’ primary focus is meeting their own funding goals, not necessarily covering a nonprofit’s business expenses. While your nonprofit’s mission is used to determine alignment, it’s the funders’ objectives that truly drive their decision-making. Funders aren’t merely looking to support your nonprofit; they seek to partner with eligible organizations that can help them achieve their own strategic aims.
In this context, transparency and credibility become paramount. Donors, before committing their resources, need assurance that your organization is a bona fide nonprofit worthy of their trust. The first thing they will do is to google your nonprofit, which will lead them to your website. A professional, informative website is crucial for instilling donor confidence and making that critical first impression.
Donors are picky about nonprofits to give to, especially with how many charitable organizations there are (and controversies with some nonprofits)... Before giving, they will do their Due Diligence (research), which may include reaching out to nonprofits to ask questions to make an informed decision.
For nonprofits, anticipating and preparing for these donor inquiries is not just helpful—it’s essential. Well-crafted, thoughtful answers can set your organization apart from the competition, helping you pass initial eligibility screenings and build the trust necessary for long-term support. By understanding what donors want to know and why they’re asking, you can position your organization as a transparent, accountable partner worthy of investment.
In this article, I’ll share strategies to effectively answer donor questions and attract more support. These will:
Uncover the key areas of interest for donors
Provide guidance on preparing compelling responses
Offer insights into building lasting relationships with funders
Let’s dive in!
Why Donors Ask: Donors need a clear understanding of your mission and values to determine funding alignment. Funders report to the IRS. The organizations they fund must fall within their scope of funding criteria, which is why they ask about demographics: target audience, age, gender, socioeconomic status, and geographic location. Donors want to know about your long-term vision and how their support will contribute to achieving these goals. They are interested in understanding the future direction of your nonprofit.
Be Prepared to Answer: Have an “elevator pitch” ready—a brief, compelling description of your organization that includes:
The target audience
The problem
Why the problem exists
Your solution
Why your nonprofit is the best organization to provide the solution
What you do and how what you do is different from your competitor
The impact you’ve made
Regularly update this narrative to reflect your organization’s growth and evolution.
Outline your Case for Support, including the Need and how donor contributions will support these efforts to meet the need. Outline your goals and the steps you are taking to achieve them. Show how your plans solve the problem and align with their funding goals.
Preparation Tips: Provide compelling evidence of the problem, what will persist without intervention, Your unique solution, and your impact through stories, statistics, and success stories.
Why Donors Ask: With over 1.9 million nonprofits in the U.S., donors want to know what sets you apart. Specifically, they want to know how your intervention/program/service will achieve the goal.
Be Prepared to Answer: Highlight what distinguishes your nonprofit. Focus on any of these areas:
Programmatically
Culturally
Operationally
Philosophically
This differentiation is crucial for attracting donors and securing funding. Speak to your competitors’ methods and why they miss the mark. This shows that you are aware of what’s going on in your industry/community. Specifically, discuss what’s unique about the program. For example:
Your methodology: Experiential learning
Who is delivering the program: People who look like your participants with lived experience
How it’s delivered: Instagram for youth, handwritten letters for seniors to meet participants where they are
When it’s delivered: 2-6 pm when youth are most likely to get into trouble
Where it’s delivered: At school where the youth are, at a senior citizens’ home where there is a concentrated number of seniors
Why Donors Ask: Donors feel more confident when they know others with similar values support your nonprofit. Funders like to fund organizations with a track record of funding. It shows that another organization took a chance on you and was successful with their investment, increasing their likelihood of success.
Be Prepared to Answer: Share demographic information about your donor base, including representative examples of key donors. Highlight the diversity and unity of your supporters to reassure potential donors of your nonprofit’s credibility.
One effective strategy for building donor confidence is to highlight long-term funders and significant donors. This approach serves multiple purposes:
It demonstrates fundability, showing that other reputable entities have deemed your organization worthy of support.
It indicates that funders are pleased with your work and impact, suggesting consistent delivery on promises.
It establishes trustworthiness, as long-term relationships imply reliable stewardship of funds.
Showcasing large donors can signal to potential major givers that your organization is capable of managing substantial contributions effectively. These include both individual donations and corporate donations.
Some donors ask probing questions to gauge a nonprofit’s fund development savvy. They may ask, “Who is your ideal donor?” This question helps donors assess whether you have a clear understanding of your organization’s funding needs and strategy.
Effective responses to this question could include:
Our ideal donor is one who funds innovation and social and economic initiatives (e.g., hunger relief, STEM education, environmental issues), aligning with our mission to pioneer new solutions in community development.
We seek donors who support collaborative efforts / nonprofit initiatives, as our work involves partnering with multiple stakeholders to achieve systemic change.
Our perfect match is a donor who appreciates steady and consistent programs. Our approach is built on a long history of success with tried-and-true programming rather than constant innovation.
Each of these responses demonstrates a nuanced understanding of your positioning and needs while also giving potential donors insight into how they might fit into your funding strategy.
Why Donors Ask: Donors want to see how their contributions will translate into real-world impact and whether your organization has a solid plan to accomplish that goal.
Be Prepared to Answer: Provide a clear, data-backed explanation of how your nonprofit will solve the problem. Explain how the donor’s contributions directly support programs. Ensure that everyone in your organization can articulate your mission and impact with passion and clarity.
Why Donors Ask: Donors inquire about impact because they view their donations to nonprofits as investments in change, not just charitable giving. They seek concrete examples of how their support has made or will make a tangible difference in the world.
By asking this question, donors aim to evaluate your nonprofit’s effectiveness, understand the real-world outcomes of your work, and assess the potential return on their philanthropic investment. They want to see recent accomplishments and measurable progress toward your stated goals, essentially asking you to demonstrate that their money will be well spent and aligned with causes that show demonstrable results.
Be Prepared to Answer: To effectively address this crucial question, establish robust processes for collecting and presenting impact data. This involves developing systems to consistently gather, analyze, and showcase both quantitative and qualitative results. Implement tracking and monitoring systems (CRMs) that provide trends, store data, allow for observing trends, etc. Use transparent reporting methods such as regular newsletters, monthly or quarterly reports, and email updates to keep donors informed and engaged.
Whenever possible, quantify your impact with specific numbers, such as the number of people served or the percentage improvement in key metrics. However, don’t neglect the power of qualitative impact—share testimonials, individual success stories, and unexpected positive outcomes of your work. Be prepared to demonstrate how your recent accomplishments contribute to your broader, long-term mission, showing donors the bigger picture of your organization’s impact.
Preparation Tips: To ensure you’re always ready to articulate your impact, develop and share specific metrics that show how you track and measure success. Create a set of Key Performance Indicators (KPIs) that align with your mission and are easy to monitor and report. Make data gathering a routine part of your operations, not just something you do when a donor asks. Maintain a centralized repository of impact stories, statistics, and reports that can be easily accessed and updated.
Consider developing visual aids like infographics or charts to make your impact easy to understand at a glance. Be prepared to contextualize your work within the broader landscape of your cause area, explaining why your approach is effective. Make sure to justify the need you’re meeting as well. Lastly, don’t shy away from discussing challenges—transparency about obstacles you’ve faced and how you've overcome them (or plan to) can build trust with donors and demonstrate your commitment to continuous improvement.
Develop and share specific metrics that show how you track and evaluate your programs’ effectiveness.
For example: number of graduates + number of job placements
Share recent success stories (videos, written testimonies), milestones (300th job placement, 400 graduates, 98% reduction in recidivism), and case studies that showcase the impact of your work. Include data and personal stories to illustrate the positive outcomes of your programs. Maintain a portfolio of recent achievements and impact stories to share with potential donors (and existing donors, too!). Include these on the website as well for those funders googling your organization.
Recommended reading: How to Demonstrate Measurable Impact.
Why Donors Ask: Donors ask about updates because they want to stay connected to the impact of their investment. This question reflects their desire for transparency, accountability, and ongoing engagement with your organization. By seeking regular updates, donors are expressing their commitment to your cause and their expectation of being treated as partners in your mission, not just as sources of funding. They want to ensure their contributions are being used effectively and to stay informed about the progress, challenges, and successes of your work. Regular updates also allow donors to feel more connected to your organization, potentially leading to more loyal donors and future support.
Be Prepared to Answer: Outline your communication strategy for donors. Explain that you have established processes for collecting and presenting impact data on a regular basis. Describe the various transparent reporting methods you use, such as newsletters, monthly, quarterly, or annual reports, and targeted email updates. Emphasize that these communications are designed to keep donors informed and engaged with your work.
Be specific about the frequency and types of updates they can expect. For example, you might say, “We send out a monthly email newsletter highlighting recent achievements, a quarterly impact report with detailed metrics, and an annual comprehensive review of our programs and financials. Additionally, major donors receive personalized updates with a particular focus on the specific projects they’ve supported.”
Preparation Tips: Here are best practices to ensure you’re well-prepared to keep donors updated.
Develop a consistent schedule for donor communications and stick to it. This demonstrates reliability and respect for your donors’ interests.
Create templates for different types of updates (e.g., newsletters, impact reports, etc.) to streamline the process and maintain consistency.
Implement a system to track donor preferences for communication frequency and method (e.g., email, physical mail, phone calls).
Use a variety of media in your updates, such as infographics, short videos, or interactive web content, to make the information more engaging and accessible.
Segment your donor list to provide tailored updates based on donors’ interests, giving levels, or specific programs they’ve supported.
Establish a feedback loop by inviting donors to respond to updates or ask questions, fostering two-way communication.
Train your team on the importance of timely and accurate data collection to ensure your updates are always current and reliable.
Consider using a donor management system to help automate and personalize your update process.
Why Donors Ask: Donors inquire about financial health because they want assurance that your nonprofit is financially stable and capable of sustaining its mission over the long term. This question reflects their desire to ensure their investment will be used effectively and that your organization has the financial capacity to deliver on its promises. By asking about financial health, donors are essentially evaluating the risk and potential impact of their contribution. They want to know that their support will contribute to a sustainable operation rather than a financially struggling entity.
Be Prepared to Answer: When addressing questions about your organization’s financial health, transparency is key. Be ready to provide comprehensive financial information, including:
Two years of financial statements, including balance sheets and income statements
IRS Form 990 for the past two years
Two years of audited financial statements (Read: The Importance of Audited Financial Statements for Nonprofit Organizations)
Profit and Loss (P&L) statements
Annual reports
Beyond simply providing these documents, be prepared to articulate your organization’s financial health clearly. Highlight key metrics that demonstrate your financial stability and efficiency, such as:
Program expense ratio (the percentage of expenses devoted to programs vs. administrative costs)
Fundraising efficiency (the cost to raise a dollar)
Cash reserves (how many months of operating expenses you have in reserve)
Revenue diversification (showing you’re not overly reliant on a single funding source)
Explain any significant changes in your financial position over the past few years, whether positive or negative. If there have been challenges, be upfront about them and discuss the steps you’ve taken to address these issues.
Preparation Tips:
Ensure all your financial reports are accurate, up-to-date, and formatted according to Generally Accepted Accounting Principles (GAAP). This standardization makes it easier for donors to understand and compare your financial information.
Regularly review and understand your financial statements.
Prepare a concise financial summary that highlights key metrics and trends. This can be a helpful, quick reference during conversations with donors.
Be prepared to explain how your financial management aligns with your mission and strategic goals.
Consider creating visual aids, such as graphs or charts, to illustrate financial trends or breakdowns of expenses and revenue sources.
Presenting comprehensive, transparent financial information demonstrates your commitment to accountability and sound financial management. This openness can significantly boost donor confidence and support for your mission.
Why Donors Ask: Donors want reassurance that their contributions are used efficiently and directly fund programs (Direct Costs). They seek to understand how you allocate resources and manage expenses.
Be Prepared to Answer: Provide a copy of your budget. Revenues should show a diverse mix of streams. Explain how funds are allocated to various programs and any measures you take to ensure financial efficiency. Provide examples of successful initiatives funded by donations and how those funds have made a significant impact. Your annual organization budget should show the breakdown of Direct and Indirect Costs. Your Fund Development Plan should show which revenue goes to cover both costs.
Preparation Tips: Share detailed budget reports and success stories highlighting the effective use of donor funds. Be transparent about how funds are allocated and demonstrate efficiency in your spending. It’s important to have Unrestricted revenue. It helps to reassure Funders that your organization has the resources to cover Indirect costs. If your revenue is all restricted funding, that’s a red flag to funders because it shows that the organization has no wiggle room to address unforeseen circumstances. And given an emergency might be tempted to use their funds to cover them.
Why Donors Ask: Donors are concerned with diversity and inclusion within nonprofits. They want to know how your organization reflects these values in its operations, programs, and leadership. They want to give to organizations that align with their values and that are actively working to address systemic inequalities and create more just and equitable societies.
Be Prepared to Answer: Describe your commitment to diversity and inclusion, including any policies, practices, and initiatives in place. Highlight efforts to ensure diverse representation and inclusivity in your staff, board, and programs. Provide the breakdown of the number of Board members, Executive leadership team, staff, and volunteers by race, gender, ability, and socioeconomic status compared to the community you serve.
Preparation Tips: Provide specific examples of diversity and inclusion initiatives and any relevant metrics or achievements.
Regularly collect and analyze demographic data for your board, staff, volunteers, and program participants. Keep this information up-to-date and easily accessible.
Prepare a concise summary of your diversity and inclusion initiatives, including specific examples of their impact.
Develop metrics to measure the success of your diversity and inclusion efforts, and be ready to share progress over time.
Be prepared to discuss any challenges you’ve faced in promoting diversity and inclusion and how you’re addressing them.
Stay informed about best practices in diversity and inclusion in the nonprofit sector, and be ready to discuss how your organization is implementing or adapting these practices. Read: Top DEI Trends in 2024
By demonstrating a thoughtful, data-driven approach to diversity and inclusion, you show donors that you are committed to these values not just in principle but in practice. This can significantly enhance donor confidence in your ability to create meaningful, equitable impact in the communities you serve.
Why Donors Ask: With the rise in cybersecurity threats, donors need to know that their personal and financial information is secure.
Be Prepared to Answer: Outline your cybersecurity practices, including data protection measures, staff training on security threats, and procedures for responding to suspicious activity. Emphasize your commitment to protecting donor information.
Related reading: Is Google Drive Safe to Use for Nonprofits?
Why Donors Ask: Donors ask about past issues or controversies because they want to gauge your organization’s integrity, resilience, and ability to handle challenges. This question reflects their desire to understand the potential risks associated with supporting nonprofits. They’re looking for transparency and honesty, as well as evidence of your capacity to learn from difficulties and implement improvements. By asking this question, donors also assess your organization’s reputation management skills and commitment to ethical practices.
Be Prepared to Answer: When responding to a donor regarding significant issues or controversies, take a proactive approach by addressing any concerns upfront to avoid surprises later. Begin by providing context about the issue, ensuring the donor understands the situation without overwhelming them with excessive detail.
Focus on the resolution by clearly outlining the steps your organization took to address the matter, including any changes in policies, procedures, or leadership that emerged as a result. Emphasize the lessons learned from the experience, highlighting how it has strengthened your organization and detailing any new safeguards or practices implemented to prevent similar issues in the future.
If your organization has not faced major controversies, mentioning this while discussing your approach to handling challenges or minor issues is still beneficial, showcasing your problem-solving capabilities. Finally, be prepared for follow-up questions from the donor, as they may seek further clarification or details.
Preparation Tips: Follow these best practices.
Conduct a thorough review of your organization’s history, including media coverage and public records.
Prepare a concise summary of any significant issues, their resolutions, and resulting organizational changes.
Develop a crisis communication plan to promptly and effectively handle potential future issues.
If there have been issues, consider preparing a brief document outlining the incident, resolution, and subsequent improvements, which can be shared with interested donors.
Practice discussing any past issues in a calm, factual manner. Avoid being defensive or dismissive of past problems.
Keep records of how past challenges have led to improvements in your organization’s operations or governance.
By approaching this question with honesty, transparency, and a focus on continuous improvement, you can turn potential concerns into an opportunity to demonstrate your organization’s resilience and commitment to its mission. This approach shows you can handle challenges effectively and learn from experience, which leads to building trust with donors.
Here’s a quick recap of the questions and answers I discussed above.
You can effectively engage potential supporters and build lasting relationships by focusing on key areas that enhance your organization’s appeal. Here are some ways to make your nonprofit more attractive to donors.
To improve your online presence, optimize your website for the best user experience. Provide the information donors seek: Mission, Impact, Success stories, Board descriptions, staff descriptions, and engaged pictures. Maintain active social media accounts to broaden your reach and interact with donors. For more information and specific ways to enhance your online presence, I recommend reading:
Regularly updating your financials and impact reports is crucial for building trust with donors. Always have detailed financial reports and impact assessments ready to show donors. Make annual financial reports and assessments easily accessible on your website for donors who want to know this information.
Word of caution: Don’t post sensitive data like your Tax Exempt number or 501(c)(3) Approval letter on your website! While you want to be transparent, you also need to keep confidentiality in mind and avoid fraudulent activities.
Storytelling is a powerful tool. Use this to connect with donors emotionally, showcasing the real-world impact of their contributions. Share the problem, the solution your organization provided, what made the solution unique, the result of implementing the program, the impact, the long-term impact as a result of implementing the program.
Compton G.RLS Club is a great example, sharing success stories of individuals who have benefited from their programs, illustrating the real-world impact of their work. By presenting narratives that highlight challenges, solutions, and outcomes, organizations can create an emotional connection with potential donors, making them more likely to contribute.
Developing programs for recurring donations can help maintain donor engagement. For example, The Nature Conservancy offers a membership program that provides regular updates on conservation efforts and exclusive content for members. This approach not only keeps donors informed but also fosters a sense of community and belonging. Watch my podcast episode on Donor Cultivation for more tips.
Obtaining high ratings from charity watchdogs is helpful for enhancing your organization’s credibility. Funders use them to vet nonprofits, so it is a great way to be found by donors.
For example, Goodwill of Orange County has consistently earned a four-star rating from Charity Navigator, demonstrating its commitment to sound fiscal management and transparency. This rating reassures potential donors that their contributions will be used effectively to support the organization's mission of helping individuals with barriers to employment find meaningful work.
In addition to ratings, showcasing community awards and commendations from elected officials can further validate your organization’s impact. For instance, if your nonprofit receives recognition from local government or community organizations, prominently displaying these accolades on your website can enhance your reputation and attract more support.
To bolster your credibility further, consider obtaining certifications from platforms like Nonprofit Ready and showcase them on your website. Examples of certifications available include:
Fundraising Essentials. This certification helps organizations understand best practices in fundraising and donor engagement.
Financial Management for Nonprofits. This course provides knowledge on managing nonprofit finances, which can enhance accountability.
Nonprofit Leadership. This certification focuses on developing leadership skills within nonprofit organizations, ensuring effective governance.
Collecting and analyzing donor feedback is essential for understanding their concerns and expectations. By actively listening to your supporters, you can make data-driven decisions to enhance their experience and strengthen their connection to your organization.
Charity: Water exemplifies this approach by regularly surveying donors to gather insights on their preferences and satisfaction levels. The organization uses these findings to refine its communication strategies, improve transparency in reporting, and ensure its fundraising efforts align with donors’ values and interests. Make your surveys short and straight to the point.
Some specific questions you might ask include:
What motivated you to donate to [Your Nonprofit]?
How did you hear about our organization?
What types of projects are you most interested in supporting?
How satisfied are you with the communication you receive from us?
What improvements would you like to see in our donor engagement?
It’s not enough to ask for feedback. You need to act on it! Incorporating donor feedback into your operations demonstrates your nonprofit’s commitment to being responsive to supporters’ needs. Use the insights gathered to refine your communication strategies, improve the quality and timeliness of your reports, and make your fundraising efforts more donor-centric.
Include detailed metrics in their reports, such as:
Total funds raised and how they were allocated across various programs
Specific outcomes achieved, like the number of individuals served or improvements in community health metrics
Personal stories from beneficiaries that illustrate the impact of donations, which helps to connect the numbers to real-world results
These reports are not just about accountability; they also serve to inspire donors by showcasing the tangible difference their contributions make. By presenting this information in an engaging format—using visuals like charts and graphs alongside narratives—organizations can effectively communicate their achievements and foster a sense of shared success with their contributors.
Make your nonprofit more attractive to donors by answering their questions, demonstrating transparency, and being responsive to their concerns. Key strategies include actively listening to donor feedback, improving online presence, providing clear financial reporting, telling compelling stories, and showcasing third-party endorsements. By implementing these practices, you can build trust and foster long-term relationships with your supporters, which is crucial for sustainability.
Addressing donor inquiries and concerns proactively not only strengthens engagement but also increases the likelihood of securing ongoing support.
I encourage you to implement these strategies today to cultivate stronger relationships with donors and receive more support. For further reading and resources on donor engagement and fundraising strategies, check out:
Various strategies exist to find new donors and secure donations to nonprofit organizations, including tapping into networks of supporters, volunteers, and board members for introductions. By conducting prospect research, organizations can identify companies that donate to nonprofits and individuals with a history of giving to similar causes. Hosting or attending events also helps nonprofits connect with potential funding partners. Enhancing online presence through user-friendly websites, email marketing, and social media is another way to attract donations. Additionally, collaborating with other organizations and utilizing paid advertising on social platforms and search engines allows nonprofits to reach targeted audiences and grow your philanthropy efforts.
Individuals most likely to make charitable donations to a nonprofit often have a personal connection to the organization’s cause or mission. While financial capacity plays a role, it doesn't always mean these individuals are the wealthiest. People who have a history of supporting charitable organizations—or who are already engaged with the nonprofit as volunteers, event attendees, or social media followers—are prime candidates for donation opportunities. Additionally, those with relationships to current donors, board members, or staff of eligible nonprofits are more inclined to contribute and support nonprofit organizations that work toward causes they believe in.
To encourage more donations, nonprofits must focus on creating user-friendly websites that clearly communicate their mission and impact. You should also offer multiple ways for individuals to get involved, such as recurring donations, volunteering, or in-kind donations. Engaging supporters through email newsletters, social media, and events helps build long-term relationships. Nonprofits can also participate in corporate giving programs that match employee donations or provide grants to nonprofits, further expanding donation opportunities. Sharing compelling stories that emotionally connect donors to the nonprofit's work, offering transparency about how contributions are used, and publicly recognizing and thanking donors can encourage repeat giving and increase referrals.
Measuring and communicating impact effectively involves collecting data on program outcomes, analyzing it to identify successes and areas for improvement, and presenting the findings in a clear and compelling manner. Use both quantitative metrics (e.g., number of individuals served, changes in key indicators) and qualitative data (e.g., personal stories, testimonials) to paint a comprehensive picture of your organization’s impact. Regularly update your impact reports and make them easily accessible to donors to demonstrate transparency and accountability.
When addressing donor concerns about past issues or controversies, it’s important to be proactive, provide context, focus on resolution, and emphasize lessons learned. Acknowledge the issue upfront and briefly explain the situation, providing enough context for the donor to understand without going into excessive detail. Clearly outline the steps your organization took to address the matter, including any changes in policies, procedures, or leadership. Discuss how the experience has made your organization stronger and highlight any new safeguards or practices implemented to prevent similar issues in the future.
To manage and report on donations efficiently and transparently, establish clear processes for accepting, tracking, and acknowledging contributions. Use a reliable donor management system to record all donations and ensure accurate reporting. Provide timely acknowledgments and receipts to donors, and regularly update your financial reports to demonstrate how funds are being used. Make these reports easily accessible by request to maintain transparency and build trust with supporters.
Demonstrating a commitment to diversity and inclusion involves actively promoting and celebrating diversity within your organization, as well as ensuring that your programs and services are accessible and inclusive to all. Share information about your organization’s diversity initiatives, such as employee resource groups, diversity training programs, and targeted outreach efforts. Highlight the diversity of your board, staff, and volunteers, and showcase how this diversity strengthens your ability to serve your community effectively. Ensure that your marketing materials and communications reflect the diversity of your organization and the communities you serve.