Building a donor base

This guide is for small charities that rely on a few loyal supporters and want a steadier base of people who give. Grants come and go. Individual donors who know and trust you are often the most reliable money a small charity has. After reading, you'll know how to find your first 50 donors, how to ask, how to thank people so they give again, and how to set up a simple donor list and a monthly giving program.

Why individual donors matter

Most grants are for a set time and a set purpose. Gifts from individuals are often unrestricted, which means you can use them wherever the need is greatest. They also show funders that your community believes in you.

A donor base is built one relationship at a time. You don't need a big list. You need people who care, and a habit of staying in touch.

Your first 50 donors

Your first donors are almost always people who already know someone involved. That's normal and nothing to be shy about.

Start by making a list. Ask every board member and key volunteer to write down 10 to 20 people they could talk to about the charity: friends, family, neighbors, coworkers, members of their faith community, people they've helped before. Don't judge who might give. Just write names.

Then look at people already close to your work:

• people who have volunteered
• people who came to an event
• people your program has helped, and their families, when it's appropriate
• local businesses you buy from
• people who follow you online or signed up for updates

Put everyone in one list. That list is the start of your donor database.

How to ask

Most people give because someone they know asked them. A personal ask, face to face or by phone, works better than a mass email. But both have a place.

A simple ask has four parts:

1. Connect. "You know how much I care about the reading program."
2. Share one story or fact. "Last spring, a third-grader who couldn't read a full sentence finished her first chapter book."
3. Ask for a specific amount for a specific purpose. "Would you give $100 to help buy books for next semester?"
4. Stop talking and listen. Let them answer.

If they say no, thank them warmly. If they say "not now," ask if you can check back later. If they say yes, thank them right away and follow up in writing.

Thanking donors

A prompt, personal thank-you is the single best way to get a second gift. Aim to thank every donor within a few days.

• A handwritten note or short phone call from a board member makes a strong impression, even for small gifts.
• Say what the gift will do, in concrete terms.
• Use their name and spell it right.

The receipt the IRS expects

Thank-you notes and tax receipts can be the same letter. The IRS rules matter here:

• For any single gift of $250 or more, a donor needs a written acknowledgment from you to claim a tax deduction. It must include your charity's name, the amount of a cash gift (or a description, but not the value, of a non-cash gift), and a statement that you gave nothing in return. If you did give something, it must describe it and give a good-faith estimate of its value.
• If a donor pays more than $75 and gets something back, like a dinner ticket, you must give a written statement saying how much is deductible. Our guide on fundraising events covers this.

It's good practice to send a receipt for every gift, whatever the size. Many donors keep them for their records.

Keeping donors: retention

Getting a new donor takes far more effort than keeping one you already have. Retention means the share of last year's donors who give again this year. Track it. If it's low, look at how you thank and update people.

Ways to keep donors close:

• Report back. Send a short update a few times a year showing what their money did. Use a photo (with permission) and one story.
• Don't only ask. For every ask, send at least one message that just shares good news or says thank you.
• Invite them in. A program visit, a volunteer day or a short call with a board member.
• Ask again, kindly. Most donors who stop giving weren't upset. Nobody asked.

A simple donor database

You don't need expensive software to start. A well-kept spreadsheet works for your first few hundred donors. When it becomes hard to manage, look at donor management software, many of which offer nonprofit discounts.

For each donor, keep:

• name and how they like to be addressed
• contact details and how they prefer to be contacted
• each gift: date, amount, method, and any restriction (what they asked it to be used for)
• date the thank-you and receipt went out
• how they're connected to you
• notes from conversations
• whether they've asked not to be contacted

Make one person responsible for keeping the list up to date. A database that half the board updates sometimes is worse than a simple one that one person keeps well.

Monthly giving

Monthly giving means donors give a set amount automatically each month, by card or bank transfer. It gives a small charity steady, predictable income, and monthly donors often stay for years.

How to start:

1. Set up recurring giving through your payment processor or donation page. Make it easy to sign up and easy to cancel.
2. Give the program a simple name, like "Monthly Friends."
3. Show what a monthly amount does: "$15 a month keeps one child in books for a year" (use your real numbers).
4. Ask your most loyal donors first, personally.
5. Thank monthly donors when they join and send them updates, but don't flood them.
6. Check each month for failed payments, often from expired cards, and contact the donor kindly.

Many charities send monthly donors one combined annual receipt listing all their gifts for the year. Publication 1771 explains that a single annual statement can be used.

Year-one donor plan

• Each board member listed 10 to 20 people
• All names are in one donor list
• We have a thank-you letter that also meets IRS receipt rules
• Every gift is thanked within a few days
• We send updates at least three times a year
• We've set up recurring giving online
• One person owns the donor list

If you want help writing your first appeal letter, ask a member charity for help through the Exchange.