Sometimes when your fundraisers are interacting with a donor, they are often asked by the donor about the minimum amount, as they feel it’s a donation and any donation amount should be acceptable.
For an organisation, it’s important to fix a minimum amount of donation (both for monthly and one-time) and accordingly work out details to communicate to donors too.
Some of the basic and essential costs that you would incur include expenses towards:
- Servicing the donor including sending the tax exemption certificate
- Meeting the overhead cost
- Use for the cause, for which this is intended to
Thus, higher is the donation amount, more would be the amount available for the cause; as the other two are almost constant. In fact, if the donation is too less; it will be used to meet the other two costs only and there may not be any amount left for the cause or in the worst case, someone else donation will be used to meet the other two costs.
On average, globally, about 40 per cent of the funds raised are used to meet the servicing and overhead cost and balance are available for the cause. Ideally, this should be between 15-25 per cent. As an organisation, you need to calculate your servicing costs, overhead and per cent, you would like for program and accordingly fix up the minimum amount for any donation.
For example- in India, majority of not-for-profit, for one-time gifts have kept out INR 1250 (USD 17) as minimum donation and about INR 300 (USD 4) as monthly gifts.
Thus, one must be transparent with the donor, communicating about their organisation’s overhead cost and the minimum donation, further stating that, they able to maintain this overhead only because of maintaining this as a minimum donation. Further must emphasis, about the impact that they able to create with the stated minimum donation.
Keeping a minimum donation and properly communicating the reason for this to the donor, further helps build trust in the donor and shares a feeling of trust that their donation will be best utilised and thus, enhance the overall fundraising.