August 10, 2023

4 Types of Donors And Their Benefits for Nonprofits

4 Types of Donors And Their Benefits for Nonprofits

Donors are the lifeline of nonprofits. It is through them that a nonprofit thrives. 

But not all donors are the same. Each donor is unique, and they have their own reasons to support the nonprofit. It is essential that nonprofits recognize the types of donors and utilize different approaches and strategies. This will help nonprofits communicate with donors effectively and motivate them to support their causes. Further, it helps the nonprofit build long-term relationships for sustainability and growth. 

In this blog for nonprofit fundraising, we list the four types of donors - individual donors, corporate donors, foundations, and major donors. We’ll also look into the sub-types in each category and how each donor type benefits the nonprofit.

1. Individual donors

Individual donors are everyday people, like you and me, who contribute money, items, or time to support nonprofits. Their support is vital for nonprofits to achieve their missions and make a positive impact. 

To identify such individual donors, nonprofits can engage with local communities through events, workshops, or awareness campaigns to connect with potential individual donors. Also, maintaining an active and user-friendly website, along with social media platforms, helps nonprofits reach a broader audience, including potential individual donors.

Types of individual donors

To keep things simple, let us categorize the individual donors into three groups.

1. Prospects

Prospects are individuals who have shown some interest in a nonprofit's cause or activities but haven't yet made a donation. Nonprofits identify prospects through interactions, inquiries, or by researching individuals who share an affinity with their mission.

Such individuals might have attended an event, signed up for newsletters, served as volunteers, or engaged with the nonprofit on social media. Prospects represent potential future supporters. Engaging and cultivating them can lead to increased donations and long-term partnerships for the nonprofit.

2. New donors

New donors are individuals who have recently made their first contribution to a nonprofit. They might respond to a fundraising campaign, attend an event, or find inspiration in the nonprofit's work.

New donors bring fresh support and energy to the nonprofit. Proper stewardship can turn them into loyal, long-term supporters. The task of the nonprofit is typically to welcome new donors with gratitude and provide them with information about the impact of their contribution.

3. Long-time donors

Long-time donors are individuals who have consistently supported a nonprofit over an extended period, often through multiple donations. They have a strong connection to the nonprofit's mission, values, and activities.

Nonprofits maintain close relationships with long-time donors, providing regular updates on achievements, sharing annual reports, and involving them in special events or initiatives. Long-time donors offer stability and ongoing financial support. They also help nonprofits spread the word about their causes and bring in new prospects.    

How do nonprofits benefit from individual donors?

According to a survey by GivingUSA, individual giving accounted for more than 69% of all charitable donations in the United States. This proves that individual donors contribute a significant portion of donations. And nonprofits benefit from these donations in a big way.

  • Steady funding: Even small individual donations can accumulate, providing a consistent income stream for nonprofits.
  • Flexibility: Individual donors may contribute to various projects, giving nonprofits flexibility to address different needs.
  • Wider reach: Engaging individual donors can help raise awareness about the nonprofit's cause, leading to more support and partnerships.
  • Long-term support: A little effort to encourage individual donors to turn into recurring donors can help nonprofits become sustainable in the long run.

2. Corporate donors

Corporate donors are businesses that provide financial support, products, or services to help nonprofits achieve their goals. Corporate giving was $20.77 billion in 2021, with almost half of it coming from employee matching gift programs. 

Nonprofits can form partnerships with businesses that share similar values or interests, creating a win-win situation. Also, corporate volunteering programs encourage employees to participate in nonprofit activities, fostering a sense of giving back.

Types of corporate donors

Corporate donors come in various forms, each with its own way of contributing to nonprofits. 

1. Direct financial donors

These are companies that provide monetary contributions to nonprofits. They might donate a fixed amount, a percentage of their profits, or contribute to specific campaigns or projects.

2. In-kind corporate donors

These companies donate goods or services rather than cash. They might offer products, equipment, professional services, or even office space. This kind of corporate donation helps nonprofits reduce costs and fulfill their needs without spending money directly.

3. Employee giving programs

Many companies encourage their employees to give back by offering matching gift programs or payroll deductions. The company matches the donations made by their employees to eligible nonprofits. These donations maximize the impact of individual donations and foster a culture of philanthropy within the company.

4. Cause marketing partnerships

Businesses collaborate with nonprofits to promote a cause while benefiting their own brand. They might donate a portion of sales from specific products or services to the nonprofit. For example, a business that sells notebooks may advertise that 10% of the profit from each book sold will go to a nonprofit for free education.

Cause marketing partnerships raise awareness about the nonprofit's cause and generate funds through consumer purchases.   

5. Sponsorships

In sponsorship, companies sponsor nonprofit events, programs, or initiatives in exchange for branding and visibility. They provide financial support or resources to help the nonprofit organize and execute these activities.

Sponsorships not only provide financial assistance but also enhance the nonprofit's reach and credibility.

6. Corporate foundations

Some companies establish their own charitable foundations to manage and distribute their philanthropic efforts. These foundations offer grants to nonprofits aligned with their mission and values.

7. Pro bono services

In this type of corporate donation, companies offer their employees' skills and expertise to nonprofits for free. This might involve legal, marketing, consulting, or technical services. Pro bono services help nonprofits access professional expertise they might not otherwise afford.

8. Socially responsible businesses

Some businesses integrate social and environmental goals into their core operations. They might adopt sustainable practices, support local communities, or donate a percentage of profits to causes.

How do nonprofits benefit from corporate donors?

Corporate donors can contribute money, goods, services, or expertise to nonprofits in various ways. Their support helps nonprofits achieve their missions and create positive impacts in the community.  

  • Financial boost: Corporate donations can provide significant funds for projects, events, or ongoing operations.
  • Expertise and resources: Businesses can offer specialized skills, equipment, or services that enhance a nonprofit's work.
  • Publicity: Corporate donors may promote the nonprofit's cause, increasing its visibility and credibility.

3. Foundations

Foundations are organizations that provide grants to nonprofits to support their projects and programs. They have a focus area, such as education, healthcare, environment, or social justice, and fund projects aligned with their mission.

For instance, the Ford Foundation, a prominent philanthropic organization, has distributed over $17 billion in grants since its inception.

Types of foundations

There are four types of foundations. But each has its own focus areas, goals, and giving preferences.

1. Corporate foundations

Companies establish it to contribute to charitable causes and give back to the communities where they operate.

2. Family foundations

A family or individual creates and funds it to support causes they care about.

3. Community foundations

They serve specific geographic areas and pool funds from multiple donors to support local nonprofits.

4. Independent foundations

They operate autonomously and make grants to nonprofits based on their own criteria and priorities.

How do nonprofits benefit from foundations?

It isn’t easy to secure foundation donations. Nonprofits have to research and apply for grants from foundations that align with their mission. But once a nonprofit is able to secure funds, it can have a positive impact on the cause it supports. 

  • Focused funding: Foundation grants can target specific initiatives, helping nonprofits expand or improve their work.
  • Credibility: Reputable foundations can enhance a nonprofit's reputation and trustworthiness by providing support.

4. Major donors

Major donors are individuals or entities that make substantial contributions to nonprofits, often providing significant financial support that can lead to transformative change. They play a crucial role in advancing the nonprofit's mission and projects.

Usually, nonprofits have a dedicated team to identify major donors and maintain communication with them to nurture long-term relationships.

Types of major donors

Major donors can be categorized into different types based on their giving patterns and level of involvement.

1. Individual major donors

These are wealthy individuals who contribute large sums of money to support specific projects or the overall operations of a nonprofit. They may have a personal connection to the cause or a strong passion for the nonprofit's work.

2. Corporate major donors

Some businesses or corporations make substantial donations to nonprofits as part of their corporate social responsibility initiatives. These donations can be in the form of grants, sponsorships, or direct financial contributions.

3. Foundation major donors

Private foundations or philanthropic organizations can also be considered major donors when they provide substantial grants to nonprofits for significant projects or programs.

How do nonprofits benefit from major donors?

It goes without saying that major donors play a crucial role in supporting the nonprofit’s mission. 

  • Project funding: Major donors provide the resources needed for significant projects or events that might not otherwise be possible through regular funding.
  • Enhanced impact: Sponsorship boosts the nonprofit's ability to make a larger, more noticeable difference in its cause.
  • Recognition: Sponsors' names associated with projects can attract attention and credibility.

Wrapping Up

The task of the nonprofit is to identify the type of donor and create strategies to address and target these donor types differently. So whether it is peer-to-peer fundraising, nonprofit email fundraising campaigns, creating an online donation page on custom fundraising software, or strengthening social media reach, each donor type needs to be treated in such a way as to maximize engagement and maintain a sustainable relationship with them. 

We recommend setting up your custom donation page or form on the best custom fundraising software, GivingX. This tool offers advanced features such as free integration with thousands of apps on Zapier, hundreds of payment gateway options, donor CRM, donor segmentation, analytics, peer-to-peer fundraising, automatic language translation, data security, and much more to help you effectively engage with different donor types and maximize your nonprofit fundraising effort. Go for it now!