Nonprofit work isn't exempt from its colloquial jargon, and pledging vs. donating is one of those semantic conundrums. At their core, both systems have charitable giving in mind. Yet, there are specific differences between the two that can impact both donors and nonprofits in the long run.
Pledge vs. Donation: Major Differences
You've heard pledging and donating thrown around enough to be familiar with the possibilities, but you might not know how they're different from each other. Think of pledges and donations like rectangles and squares. One falls into the broader category but stands alone for its special properties.
Donations are, put simply, the money, time, or goods that individuals freely give. These are usually given to an established organization or nonprofit. Meanwhile, pledges are a specific type of donation that promises a future gift. They're a fancy version of an IOU slip. This is where you see people pledging thousands of dollars to a group so they don't have to run to the bank to make a transfer right away. Instead, they can collect the money and donate it at a future time.
When to Pledge vs. When to Donate
Given that there are pretty clear-cut differences between the two types of charitable gifts, it's easy from the donor's perspective to choose the appropriate one in various situations. If you're donating or pledging for the first time, check out these scenarios to see when you'd want to pledge vs. donate.
Pledge If You're Gifting a Large Sum
If you want to give an organization a large amount of money, pledging is a great way to give you the space to raise the funds to match your goal. You can also crowdsource in the name of a group to match a pledge. All in all, with large donations, it's a great idea to pledge.
Pledge When You're a Regular Donor
If you're on a donors list with an organization (which means you've probably donated a large amount in the past and/or are really passionate about the group), then you'll be called to make pledges every once in a while. Since standing donors have a consistent relationship with an organization, it's customary to accept pledges from them that they'll produce throughout the year.
Pledge If You Don't Have the Money Upfront
If you come across a fundraiser on your way home from work, you probably don't have any cash on you to donate. Or, you might want to gift to a relief fund but are in-between paychecks. If you can't pony up the money right then, a pledge is a great way for you to lock in your intention while giving you the space to come up with the money when you can.
Donate When it's Material Goods
Organizations that accept physical donations usually run on the basis of need, and so pledging to bring in a box or two of clothing or hygiene items isn't necessary. You don't need to wait to donate your physical items; just drop them off as a standard donation.
Donate When It's Your Time
The pledge system tends to only be used for monetary donations. So, if you want to volunteer, you don't need to pledge an hour of your time at a future date. Instead, just contact the organization and get on their volunteer list. Then you can set up a schedule or date in the future that works for you.
The Pros and Cons of Donating vs. Pledging for Nonprofits
If you're starting a nonprofit organization or are working with one that's never taken donations/pledges, you probably don't know which one to implement first. We've got you covered with all of the major pros and cons for each.
Donating is an important arena of charity work that nonprofits heavily rely on. And they can rely on donations because of the many positives that come with them:
- You get a gift immediately. The more goods, services, and money you have on-hand, the more work you can accomplish per your nonprofit's mission.
- People are more likely to donate because it's easy. The process doesn't require follow-up and forms, so one-time donors are more likely to give a small gift.
- People don't have to commit to your organization. People are flighty and may want to donate, but don't want to be contacted consistently about future ones.
- You can reach a bigger pool of people. Since donating only requires a location or a link, you can use easy avenues like social media to get people to send theirs in on their time.
Despite all of its positives, there are a few drawbacks to the donating system.
- You don't always see return donors. Donations are largely made up of one-time donors, so you can't rely on them to fund your organization.
- There's greater risk for giving droughts. Donations rely on people giving when they want to (if they want to) and this means that there might be months on end with very few donations.
- You don't directly connect to the donor. When people make onet-ime donations, they're not building a rapport with the nonprofit. This lack of relationship means they're not as emotionally invested in its successes and helping manifest those.
Pledging is a less common donating style, but established organizations love to use it. Here are the reasons a nonprofit might establish a pledge system.
- You have the promise of funding stability. Since a pledge promises a future payout, it means you can rest assured you'll have donations to rely on throughout the year.
- You can establish a relationship with your donors. Reaching out to them throughout the year lets you build a rapport with them that'll encourage them to continue working with you in the future.
- You can get a huge return on your efforts. The amount of money you spend on gaining new pledges can be returned ten-fold by the size of their donations.
Pledging isn't without faults, and these are just a few of them.
- You're taking people on their good faith. Most states consider pledges legally binding, but if someone doesn't want to pay up their funds, then you'll end up spending money at court to try to make them donate.
- You have to put in extra work to follow-up. Donors aren't always consistent, and so you might have to contact them multiple times to make sure they match their pledge.
- You have to keep track of them. If you don't have a great system in place to keep track of who's making pledges and when they're made for, you can lose out on some serious money.
- You're beholden to keeping donors happy. Unlike one-time donors, people who make pledges and are on donating lists have a greater stake in the organization. This means that they'll make their displeasure heard, if there is any.
Pledging and Donating Both Want the Same Goal
Whether you pledge or donate doesn't really matter in the long run. At the end of the day, both pledging and donating are systems people use to gift something they have (time, money, resources) to someone else for free. So, now that you know what each of the styles are, you should be better equipped to gift the way that works best for you.