Principles and Guidelines

Fundraising appeals for specific purposes often create donor expectations that the organization will use and account for such funds in accordance with those purposes. Any appeal that purports to limit the use of funds to a specific program, purpose, or project (i.e., to less than any or all exempt purposes) is a limited-use appeal.

ECFA’s standards stipulate that:

• resources are used and accounted for in accordance with their intended purposes,
• communications are truthful, current, complete, accurate and not misleading, and
• donor expectations are realistic and satisfied by the use of funds.

Historical practices of churches and ministries has conditioned donors to give for specific purposes and to expect their funds to be used for those stated purposes and not for the organization’s general use. Such practices include raising funds to support specific projects or programs as well as the ministry of specific workers. Fundraisers acknowledge that specific use appeals are often more effective than general appeals.

The following principles and guidelines will be applied to specific interpretations:

1. Any appeal that solicits funds for specific purposes (other than unlimited or general use for any exempt purpose) should be accounted for separately to demonstrate that the funds have been used for those limited purposes and to reflect any balance remaining.

2. Any appeal that gives examples of specific use but is intended to be used for general or any exempt purpose should clearly indicate that fact in both the communication and the response opportunity.

3. The donor’s indication on the response opportunity is the primary indicator of donative intent; the understanding set forth in the appeal is supplemental to the donative intent expressed in the response device.

4. A limited-use gift results whenever a donor selects a giving option on a response opportunity other than “unrestricted” or “where needed most.”

5. All funds that are given for specific purposes, projects, or programs should be accounted for separately, with charges allocated based only on disclosed policy (such as administrative assessments or indirect costs) or for costs that are directly attributable to the project, program, or purpose.

6. In both the response opportunity and appeal letter, information concerning limitations or lack thereof should be clear and complete.

7. Statements in response opportunities and receipts regarding overfunding policies (such as, “funds in excess of those needed will be used as directed by the board”):

   • do not make limited use gifts unrestricted until a future event occurs and,

   • do not diminish the organization’s moral, social, and perhaps legal obligation to use the funds for the specified purpose, except when such an unanticipated event occurs.
      
8. Funds received from appeals for specific purposes—based on implicit donor directives and donor expectations—should be used and accounted for as donor-restricted (the term “designated” is sometimes used as another term for donor restricted).

ECFA suggests the following disclosure for response opportunities and receipts (you should consult legal/tax counsel for your specific application):

Contributions to (charity) are administered and disbursed under the supervision of the (church or ministry). In the unlikely event that a ministry is overfunded, gifts may be used in another ministry activity as closely aligned to your interest as possible.