157: Old Woman Shakes Fist at Sky | How Classy May Be Hurting Your Donor Relationships

Welcome to Charity Therapy, the podcast where we explore the ups and downs of the nonprofit

sector and answer your burning questions.

I'm your host, Jess Berkin, owner of Berkin Law Office, and I'm excited you're here.

Imagine hanging out with me in my super smart, funny nonprofit expert pals.

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So get ready to join the conversation and bring me the tough questions.

I ain't scared.

Ready to rock?

Let's dive in.

Hello, and welcome to this episode of Charity Therapy.

I am your intrepid host, Jess, here with my intrepid.

Intrepid?

Why?

I don't know.

Megan, hey, I don't know how this became part of the constant lexicon of this podcast,

but I don't hate it.

Like it's fine.

As long as we don't say the word impactful or what was your kryptonite word, you had one

recently.

I did.

I don't know.

You don't hate enough, Megan.

You don't hate this word, whatever it was, you do not hate it enough because you should

just be able to be like, it's this, because impactful is like, I hate it with a passion.

True.

You heard of your first folks.

If you say the word impactful around Jess, she will be judging you for it.

Here's the thing.

It's not a word.

I know like, websters needs to stay culturally relevant and like language changes over time.

Blah, blah, blah.

But no, the reality is people just were saying the word impact wrong.

And then everybody just papily blessed it.

Everybody was just like, I guess that's a new word.

Things are not full of impact.

You can't have something that is full of impact.

It impacted you.

It had great impact on you.

It is not full of impact.

Okay.

I'm a calm down now.

Yep.

This is as one might guess, not the first time I've heard this and from Jessica Burkin.

I feel very strong.

I'm ready to go.

I mean, same.

I am just not quite as much of a hater about it on certain things, but that's okay.

You just haven't had time to make me tell you whatever the word was.

I forget what it was.

True.

Give me another 15 years.

And maybe this will be like the bane of my existence.

As it becomes more and more common and people keep using it.

And now it's become like in the dictionary, you're your rage over this word that shouldn't

be used or exists will grow.

It's one of the fantastic parts of getting older, old woman, old woman shakes just like

sky set into your, yeah, I mean, you're not old, but you know what I'm saying, not

baby anymore.

Just one of those things where you like look up and realize, hmm, that's definitely like

an older adult move.

I'm on the track.

I already do this with technology sometimes where I'm like, oh no, like I'm not that great

with some newer technologies and I'm always a little behind the times on pop culture

stuff.

And I'm just like, when I'm like 65, like kids and grandkids are going to be like, what

are you doing?

Like, well, it's fine.

I guess we should probably do whatever we're doing here.

Yeah.

I'm like, keep that ranty feeling you have now because as you know, Jess, we're going

to do a little, we're going to wait into some drama today.

It's going to be a slightly different podcast instead of a traditional listener question.

This one, we're ripping from the, you know, halls of LinkedIn, some drama happening over

there.

Jess, you spotted this post from Eve, tell, tell the people about Eve.

Well, okay.

So Eve, if you've been listening to the pot for a while, Eve Barnes has been a guest.

Eve is like one of the most well-respected, most knowledgeable nonprofit lawyers out

of Minnesota.

Eve testifies before Congress.

She talks to the IRS commissioners, she's a trained as an accountant and an attorney.

She's been around for a million years and there's like almost nobody who I respect in

my profession more than Eve Barnes seen.

So of course, I follow her on LinkedIn and she's been impactful.

Oh my God.

How dare you.

That's it.

You're fired.

I'm sorry folks.

There will be no more episodes featuring Megan.

Megan is now dead to me.

I really had, I just, I had to, I'm sorry, continue.

The opportunity was there and I couldn't.

God.

Oh.

Don't anyway, yeah, she's like the 990 queen, she's amazing.

And yeah, she's been posting on LinkedIn and she had a post about her, her experience as

a donor with getting the automated acknowledgement letter from a nonprofit donation collection platform

and yeah, the letter was legally insufficient and Eve had some thoughts about it.

Yeah.

You can imagine as a donor, she is very well aware of what the rules are and what she

needs to be able to do.

So let me read a snippet of the post for these people, for the people so that they know

what we're talking about.

So Eve's post last week of the year, we made a substantial amount of charitable contributions

many affected online this morning.

We received tons of official receipts for US income tax purposes and every one of those

generated by classy, the gifting platform, the Doni used failed to state.

No goods or services were provided back to us in exchange for the contribution.

So once more, I have to start a watch or more likely eventually initiate a, a communication

thread with the organization for a replacement letter because the one in hand is useless

for those of us whose dollar gift was $250 or more.

Tisk, Tisk.

This is the post.

There's a lot of like nonprofit professionals getting kind of riled up in the comments here

about this issue that seems to be a longstanding issue.

So Jess, can you break it down here?

What's going on?

Okay.

So here's, well, first of all, there's a bunch of software companies that their business

model is to sell their product to nonprofits to make getting online donations easier.

Right?

So software is a service that they charge money for nonprofits are paying for it.

And they're sort of pitch is you can collect money online.

We make everything easy for you.

Everything is covered.

Here you go.

And one of those things that they offer to do is send the donor a gift acknowledgement

letter, which is great, except the IRS has rules around what has to be in there.

And that gift acknowledgement letter in order for you to actually take a deduction on

your taxes.

So if you have a letter that doesn't actually meet through requirements, the IRS will

say, sorry, that donation actually didn't count.

And I mean, realistically, unless you're getting audited, this isn't coming up, which

is why I think this continues to be a problem, but people who actually know are going to

be annoyed that they didn't get a good letter from you.

And there are a lot of donors who don't care because they're giving $20.

And if you give $20, there's no letter requirement.

So this only applies to people who are giving more than $250.

But the more the bigger the gift is, the more likely it is that the person actually cares

to put it in their tax file because like Eve's post thinks somewhere, she says we made

a lot of gifts and many of them were way over $250.

So they actually do care about getting the deduction.

And now instead of the donor feeling like, hey, this is a warm fuzzy feeling.

I just donated.

I feel good.

She's feeling ticked off because now there's all this extra work she's going to have to

do.

Absolutely.

Well, and it says it in the comments in the conversation that has kind of been spurred

by this post.

But you know, for Eve issue saying like, this is not actually something we're even going

to get a deduction for, but there's some like state rules that they had to like deal

with that an insufficient letter isn't going to work.

So it's like it comes up in other directions too.

And these are people who want to substantially support your mission with like a large donation,

like over $250, potentially way over $250.

And so the last thing the nonprofit surely wants to do is give them more work to reach

out and be like, Hey, this letter doesn't actually work.

We need this from you and the back and forth to be able to get that done.

So it creates a lot of friction and frustration from the donor who in theory is just trying

to support your mission.

Yeah.

And here's the thing.

It's like what really chaps my hide is that it's too full, right?

It's the software is a service people being like, we've solved this problem for you.

And you know, a lot of nonprofits don't know what they don't know.

And so like they hear you say we're professional service and we're going to solve this problem

for you done and done.

And they're like, great, I'm relying on you.

Your professional service provider, you're saying we're good, right?

And then it's frustrating because if you're if you're getting gifts over $250, you should

not be counting on software to just kind of like manage that for you, right?

I mean, there should be a handwritten think you know, there should be some tickler in

the system that's like, Hey, this person, it has is giving at a higher level.

You're going to engage with them differently in the future.

You're going to like try and obviously they might give it at even higher level.

Well, you know, who's not going to give it an even higher level?

Somebody who's annoyed with your lack of professionalism in making their gift easy.

And so it's like the nonprofits shooting themselves in the foot and then wondering why they don't

bring in more money for fundraising.

It just kills me.

It kills me.

Well, and the thing is, is that like I have a lot of empathy for the nonprofit in this

situation because classy is a very like well known respected, like common software to

use in the industry.

So if you are just sort of like it's saying it sends an auto generated, you know, I'm sure

there's a lot of people in a demo and I'm sure they're holding themselves out like they're

doing this for you.

So of course, people are relying on it.

And none of these like smaller nonprofits are like going to look at the IRS rules for

the donate, you know, don't acknowledgement letters like they're relying on third party

information to try to comply with these rules.

And so when you have this, you know, well known platform that is claiming that they'll

do everything for you.

Like yes, it's on the nonprofit to check that and make sure that is correct and not just

trust that.

And the day it's like, why is this, you know, this is, you know, the classic example that

we've talked about before of a for-profit company trying to quote unquote, help nonprofits

and make their life so much easier, but actually just stepping in it and causing problems

for nonprofits.

Well, and what kills me is when you are doing the research for this episode that you you

discovered, not that it's not knowledge, but it was we didn't know that class is actually

owned by GoFundMe, which has, you know, been.

The eyeer of everybody in nonprofit consulting for the last two months over their whole

debacle.

And if you don't know what I'm talking about, go back and listen to our, our episode,

a couple of episodes ago about GoFundMe deciding that they were just going to give everybody

a donation profile, whether you want to one or not, it was a whole mess, it was a whole

mess.

So I'm like, I was just like, oh, that makes sense.

That tracks.

Yep.

Classic.

And again, this is not something that I was personally like aware of the issue here,

but from Eve's post in this conversation that has been generated, it's pretty clear

that this is an ongoing problem that has just refused to be fixed.

And it's one of those things that maybe the donation, you know, platform literally

cannot provide the correct letter.

Like maybe it's too complex for that.

And that's fine.

I'm asking classy to do things that are not possible, you know, like, but it's like,

don't hold yourself out as taking care of everything.

Yeah.

If you can't, like if it's too complex to do it, don't do it here.

Okay.

I got a lot of software developers in my world, right?

And I understand, you know, I've seen, seen the memes in the short form content about,

you know, why the unreasonable ask from the company to this simple feature we just want

and it's like an unreasonable ask, I get that.

Okay.

But I'm sorry.

Is this basic logic?

If gift equal $250 or more, if the number in that field is $250 or more, then do not

send acknowledgement.

Like, just, right, just don't even send it.

Just don't do it.

Yeah.

It's truly not like in an ideal world, would you be able to, like, set up little campaigns

and you're saying, this one comes with a get your free t-shirt if you donate at this

level.

And so when they click this button, the acknowledgement is going to say something else.

Yes.

I understand that that's more complicated software development.

But literally just if the dollar amount is $250 or more, don't send the acknowledgement

because I can already hear somebody's listening to this.

And they work at a nonprofit that uses glassy and they're like, no, no, no, we are on top

of this.

Like, yeah, it does that.

But then we follow up with, I don't care because the donor who knows is already ticked

off.

You lost the opportunity to have a pleasant interaction when that acknowledgement that's

wrong went out.

I don't care if you follow up with the right thing.

You had the opportunity to make this a good experience and that's gone the second

paranoid.

So.

And also the donor who doesn't know who then is like running around with this letter that

if it's actually needed for something, doesn't find out until way after the fact because

the reality is even if you send a follow up one, which one are they going to remember to

grab?

Like, there's now two in their email or whatever that has the like information in it.

And it's 50, 50, whether they grab the first one that came or the second one that came.

And like, they're not going to know that there's a substantial difference between these two

donor acknowledgement letters, particularly if the one from classy says that this is like

legally sufficient or whatever it says.

So it's just, yeah, well, it's a frankly, I don't know.

I haven't used this software.

Maybe it is fully customizable.

And maybe nonprofits are just not doing it, you know?

Maybe class is going to be like, yeah, dumb, dumb, you could be doing this.

Well, you know what, that's your, your causing people to have a legal issue at their nonprofit.

You should work a little harder onboarding your new customers, make sure that they know

how to customize it and that maybe this is not rocket science.

You don't need to hire me to figure out that this is the rule.

So like maybe provide some documentation about how to make, make a good gift acknowledgement

because it's also different if you, if you did give somebody something and you can see

where that would be like, donate to the public radio station, you're going to get a tote bag

and that happens online, right?

Like, it just everybody is potentially in the wrong here.

And it just, it's not that hard of a thing to fix is my beef.

Absolutely.

The fact that this has evidently been going on for years that, that is kind of the whole

point of Eve's post is not even just that like, this thing happened that now I have to

go chase down some nonprofits for a better letter.

It's that this happens every single year and no one has made any changes.

And she even talked about how like there's been such an uproar about the GoFundMe nonprofit

pages well deserved.

But like, why are we not also, right?

Like yelling at them about this one because like, let's get this, you know, changed for

the nonprofit sector.

Like, it doesn't have to be this way.

Well, Eve, you know, if you happen to be listening to this because I, that would be like

my dream that Eve listens to our podcast, you know, you want to come on here and rant.

Open invite girl, get at me.

Like, come on back.

Yeah.

We have, we have you back.

We got this.

Anytime.

All right.

I just have two kind of main takeaways here, actually, maybe three.

So one is that like, you need to send out gift acknowledgement letter when you receive

a donation.

And it's not just a simple thank you.

There are like IRS rules that dictate what needs to be in that letter.

So if you are not doing that, this is your indication that something needs to change there

so that you are following those rules.

Secondly, don't trust every single software that tells you that it just takes care of

everything for you.

Like nonprofits are complex and unfortunately, that means that a lot of people who are in

theory wanting to help or really wanting to make money off the sector, don't actually

know what you need to do.

And the last takeaway really is that this is a real trend of software as a service or

other sort of for profits try to help and they are actively causing problems.

But as we saw with the GoFundMe thing last year that you like, if we make enough noise,

we can let them know that it's not helping.

Yeah.

So let's make a little noise.

Absolutely.

I would love to see GoFundMe's comment section blow up with demands for this to be better

or better documentation or whatever.

Okay.

What we forgot to say as the fourth takeaway is that thou shalt not use the word impactful

in your day-to-day life ever again.

So if you are in a fendler, no, that I disapprove and you need to seek reform, okay?

You need to be reforming your vocabulary use other than that, though.

I think those takeaways were great, Megan.

So glad.

So glad I could provide the ones that are actually relevant to the opposite.

All right, folks.

Thank you so much for being here.

This episode with a friend, if you are aware or involved in the nonprofit who uses online

giving, look at your donation acknowledgments.

Make sure you're doing them right.

Make sure you're having a good experience with your donors and let people know about

the show.

It really helps us out.

If you have a question or a story to share, you know, get at us.

We'd love to keep it anonymous and, you know, as long as you're not even born soon,

I'm not going to say your name on the internet.

So send us a message at charitytherb.show and thanks a lot.