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Potential Issues with Online Donor Solicitation and Grant Applications

As organizations have had to navigate and operate under the instantaneous, shifting changes that are resulting from the current pandemic, one of the largest challenges to overcome is continuing to receive and replenish resources during a time when normal fundraising activities might not be possible.

Revenues previously raised from annual fundraisers and campaigns that are not able to be held due to stay-at-home orders, capacity restrictions, and other health safety measures have created significant gaps in funding for many organizations. Organizations have had to embrace technology and either expand their current focus or newly open their doors virtually for their donor base to continue to support their mission. While this has been a great opportunity for many organizations, moving into this platform too quickly could result in some organizations running into potential issues and pitfalls.

Several of these potential issues include:

  • Loss of personal connectivity with the donor
  • Donor information data security
  • Potential fraudsters
  • State registration issues
  • Potential unrelated business income tax (UBIT)
  • The language used for solicitation causing unintended restrictions

As organizations work through incorporating virtual solicitation of funds, it is important to remember to include some of the following practices to avoid these potential issues.

  • Do not lose touch with your donor base. Be sure to reach out to your donors during this time and maintain an ongoing dialogue with them. This is also an opportunity to let them know how your organization is continuing to serve its mission and the specific needs and shortfalls the organization is facing.
  • Do your due diligence before using any online giving platform to ensure it properly protects your donors’ information. Additionally, ensure your computer and software is up to date on its data security protection.
  • Fraudsters are more likely to take advantage of individuals acting too quickly during times of crisis, so remain skeptical and critical of all requests and communications received during this time. Be sure that you are not sharing any personal information unless it is over a secure communication thread and confirm directly with any donor a request that seems outside of the norm.
  • Understand how far your online solicitations are reaching to ensure that all contributions received remain tax-exempt and do not create any unintended UBIT scenarios.
  • Ensure that any online games or auctions that have the potential to qualify as “legalized games of chance” are properly filed and registered with applicable state authorities before commencing.
  • Be intentional with the language used in your online solicitations so as not to create any unintended restrictions with the gifts received.
  • Consider focusing your solicitations to key areas of need for your organization during this time to steer contributions to the programs with the most impact.

Simultaneously, many organizations are also moving quickly to apply for and receive various relief funding to help make up for lost revenue sources during this time. The online application for grants and other resources create the same concerns for organizations with their own data and information. Therefore, be sure to incorporate these same best practices when applying for funding of your own.

If you have any questions regarding the solicitation of funds or any other issue affecting your not-for-profit organization, please contact your Blue & Co. advisor.

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