Donor

A donor is a person, corporation, foundation, or other organization that gives money, securities, property, or services to a nonprofit organization or other recipient, without expecting repayment or any equivalent benefit in exchange. Donors are the source of the contributions that nonprofit organizations rely on to fund their programs and operations, and a donor's own relationship to a gift continues to matter even after the gift is made, since donors frequently attach conditions or restrictions that affect how the recipient is permitted to use the funds.

Individual donors range from small, recurring contributors giving modest amounts to major donors capable of funding entire programs or capital campaigns on their own. Institutional donors, including corporate foundations, family foundations, and government grant-making agencies, often operate under more formal application and reporting requirements than individual donors, and frequently attach specific performance conditions a nonprofit must satisfy before, or in order to keep, the funds.

Whether a donor's gift is classified as restricted or unrestricted depends entirely on the donor's own stated intent at the time the gift is made, not on how the recipient organization might prefer to classify or use it. A donor who specifies that a gift must be used only for a particular program, or only after a particular date, creates a binding restriction the recipient nonprofit is legally obligated to honor, which is why nonprofit accountants pay close attention to the exact language a donor uses when making a significant gift.

A nonprofit organization's donor base, and how diversified or concentrated it is, matters directly to its financial stability: an organization heavily dependent on a small number of large donors faces meaningfully greater risk if any one of those relationships ends, compared with an organization supported by a broad, diversified base of smaller donors. Nonprofit boards and finance committees routinely review donor concentration as part of assessing the organization's overall financial health and resilience.

A local foundation might donate $50,000 to a community nonprofit with no conditions attached, becoming an unrestricted donor the nonprofit can use however it sees fit, while a different foundation donating the same amount specifically earmarked for a youth mentoring program becomes a restricted donor, whose gift the nonprofit is legally bound to use only for that specific purpose. Nonprofit development staff maintain detailed donor records tracking giving history, communication preferences, and any restrictions previously attached to past gifts, since this history shapes how future requests and stewardship communications with each donor are handled.

A donor giving to a qualifying tax-exempt organization, such as one recognized under 501(c)(3), can generally deduct the gift on their own income tax return, subject to limits that vary by the type of asset given and the donor's income, which is one of the main reasons nonprofits are so careful to provide donors with a timely, properly worded acknowledgment letter confirming the amount and date of each gift. A donor giving appreciated stock or property rather than cash can sometimes deduct the full fair market value of the gift while also avoiding the capital gains tax that would have applied had they sold the asset first, a combination that makes non-cash giving an attractive option for many larger donors and one that nonprofit development staff are trained to raise proactively.