The Benefits of Designated Giving

Have you ever come across a nonprofit that you wanted to support, but had a specific project in mind that you wanted your donation to be used towards? Perhaps a renovation of a church?  Improvements to a singular conference or reading room in your local library? Or maybe you wanted to donate to the local United Way agency in the city you recently relocated to, but you wished a portion of your gift be earmarked for a homeless shelter that operates back in your hometown?

These types of donations — Designated gifts — are contributions made to a nonprofit or charity for a specific purpose or use.  Typically, the donor declares his/her designation that their gift goes toward a particular project, program, or in some cases the funding of a specific individual either within the organization (an example: a newly created position to head up a major fundraiser) or a beneficiary of the nonprofit (perhaps individuals struggling with addiction).

Following is a comprehensive overview of Designated Giving, its benefits, and advice on how to integrate Designations into your current Giving efforts.


Many nonprofits (including a majority of United Way agencies) have made Designations a part of their Giving options, either through Individual (one-time/’Donate Now’ or recurring/subscription) or Workplace Giving campaigns. America’s Charities estimates that approximately $5 billion is raised through Workplace programs every year. Furthermore, AC’s Snapshot Employer Research Report states that participation in Workplace campaigns increases when employees are given choices as to where they can apply their donation. Donors are responding to the benefits of branded giving initiatives that offer choice and give employees a greater say in how their donation is used; in fact, 30% of employee donors say the reason they don’t give through their employer’s Workplace program is because it doesn’t include the causes they care most about.


Historically, donors who performed their own deep-dive research into exactly how their gift was being used were relatively uncommon. More likely, regular nonprofit contributors fell into an organization’s ‘family and friends circle’ — that donor-nonprofit relationship usually lasted for a long period of time. Nowadays, however, there are more nonprofit organizations than ever before (more than 1.8 million in the U.S. alone as of 2020, according to the National Center for Charitable Statistics), and consequently potential supporters are being exposed to more asks from all directions.  That — and the availability of nonprofits’ missions, works and financial reports with a simple mouse click — has led donors to be much more intentional when it comes to aligning their support with a charity.  And unless there’s a strong or long-standing personal attachment to a cause, many donors now ‘shop’ their giving around….especially if a life-threatening pandemic (see COVID) or natural disaster occurs and emergency necessities must be procured. Donors want their gift, no matter how nominal, to have real, discernible impact; designating that gift gives them more control over how their contribution is being used towards a positive outcome.


The ability to Designate donations benefits more than just the donor.  Your United Way agency, church, school, museum or other nonprofit establishes stronger trust with donors through designations; they feel more empowered, more valued, and more appreciated as they see their very tangible impact in an area of their choosing.  In turn, more appreciative donors oftentimes elect to get even more involved with your cause, more generous with their pocketbook — and perhaps even go to bat for you as a recruitment ambassador within their professional and personal circles.


Talking with your prospect about the meaning behind their interest in your mission, and the intent of their gift, gives your organization a valuable point of contact to strengthen and nuture the donor-nonprofit bond.  Talking about designations BEFORE the contribution is made; striving for intentionality at all stages of the relationship is mutually beneficial in maximizing the good feeling both sides will hopefully have after the gift has been awarded — and it helps you get to know your donor better. You then can use the knowledge you’ve gained straight through the discovery/pre-donation and contribution stages. As a development professional, your goal should be to arrive at a meaningful solution that lifts both your organization AND your donor.



Far too often, nonprofits stay close to their donor base until the gift has been made — then they move about their daily duties of running their organization, sometimes neglecting the very people whose generosity made their mission possible. A smart fundraiser knows that the relationship isn’t over just because the gift has been awarded. Many argue that stewardship is the most critical part of the donor-nonprofit relationship — because strong stewardship begets strong loyalty, which in turn begets greater (and more frequent) acts of support.

Make a solid and timely step-by-step stewardship plan consisting of multiple touchpoints across a variety of mediums: formal acknowledgments, personal thank you notes from the organization (or even a beneficiary of their kindness), recognition in emails, newsletters, social media posts, annual reports, and at event and galas if you have them.  And at every turn, make their specific designation, telling them precisely how the money will be allocated, a part of that stewardship.


If you’re new to the Designation game, there are some Is that need to be dotted and Ts that need to be crossed. 

Designated gifts are required by law to be used for the purpose expressed by the donor.  If for any reason the entire gift is NOT used for the donor’s intended purpose, the gift recipient must send a written request to the donor for a change in the designation, or if the donor is no longer reachable (outdated/incorrect contact information, he/she has passed away, et al) permission from a court may be obtained.

Designated gifts also have requirements in how they are recorded and reported in a nonprofit’s financial books.  As long as designated gifts are made to benefit an accredited 501c3 organization, they remain tax-deductible. However, if the donation designation is earmarked for a specific individual, the gift is not deductible.

If a donor who has made a designated contribution wants to either change their designation or (in rare cases) asks for his/her donation back, the donor must put his/her request in writing to the recipient of the gift. If a refund is being given, the nonprofit must send a letter to the donor acknowledging the refund, as well as recommending that the donor consult with their tax advisor regarding any necessary changes to their tax returns in light of the refund.

Drop us a quick note if you’d like to discuss making Designated Giving a part of your offerings!