Transactional versus Transformational Giving: Ideas for Building Meaningful Nonprofit Philanthropic Engagement

by Sonja Carter, JD

We’ve all done something – given in just enough – to get someone to stop doing something – to stop “bugging us” about something and go away. 

Perhaps it’s the dog begging for human food – you might toss fido just a bit, to get him to go away. Or your child begs for another hour on the swings – you might give her 10 more minutes, just to stop the badgering. And you might give a “go-away gift.” A gift that is just enough to get the solicitor to go away. 

That is a transactional gift. 

Yes, it’s a gift. Yes, it helps the nonprofit. Yes, the donor gets a tax deduction. But it is an exchange where the gift is the focus, not the relationship. A transactional gift is akin to paying for a membership at a gym or museum, in that it “buys” something. A transactional gift is one that is given only because it’s expected, or an arm is twisted. And it is the opposite of what a nonprofit – and a donor – should be seeking. 

The ideal is, instead, a transformative gift. A gift that represents the beginning of the nonprofit-donor relationship, not the end. 

Transformational giving is what the nonprofit and the donor experience when the gift experience “transforms” or changes either or both parties. In transformational giving, the donor is an actor in the story about how the nonprofit can build a better future; their gift can help make that future happen. In transformational giving, the donor is compelled by stories that illustrate societal or community need, and the nonprofit’s ability to meet that need; the donor is compelled by the impact that is possible with their philanthropic support.  

In transformational giving, the solicitor takes the time to listen, and to learn what is important to the donor; it is not a one-sided monologue about the nonprofit or money. And transformational giving occurs when the donor is thanked and recognized for their support, and receives regular feedback and reports about how their generosity has transformed the community, the beneficiaries, and the organization.

In transformational giving, the gift is the beginning of the relationship, not the end.  

Did you notice the words and phrases I just used: “donor as actor”, “impact”, “listen”, “learn”, and of course “transform”? These are all action verbs (or action-oriented), and that matters, because transformational giving doesn’t just occur magically. 

It is something that happens with intention. Yes, lightning does strike; large gifts can arrive despite an abundance of errors or bad practices. But transformational giving that lifts up the donors and the nonprofits – together – to achieve greater things? That requires hard work. Consistent work. Work done with integrity, honesty, and joy. Joy? Yes, joy. Treating each donor as important actors in the work your nonprofit can and will do with their support, listening and learning about the donor to deepen the relationships between the donor and the nonprofit…this requires slowing down to engage the donor on a deeper level. When the donor and the nonprofit become partners in making the future happen, the relationship – and the gifts – are transformative. 

Some experts posit that transformational giving requires an immense gift that dramatically reshapes the nonprofit - a gift that builds an entire building or starts a new program. I disagree. I believe and have experienced in my career as a front-line fundraiser, fundraising executive, and fundraising consultant, that the size of the gift is not the determining factor. Instead, it is the care and attention that is given to nurture the relationship between the donor and the nonprofit – that is the determining factor. When that is done right, the gift is the beginning, and not the end. 

That is the type of philanthropy that sustains nonprofits during good times and bad. And that is what we should all seek.    

Sonja Carter, JD previously served as the Senior Campaign Advisor at the Heller Fundraising Group. Sonja's expertise lies in capital campaigns, planned giving, major donor cultivation, solicitation and stewardship.