Nonprofit vs. Political Fundraising: What’s the Difference?

If you’re new to fundraising, you can easily get overwhelmed by the ever-changing landscape. This is especially true in our current political climate, where it feels like anything can happen. For example, on January 27, the Trump administration pulled government funding practically overnight, causing nonprofits nationwide to scramble. 

But even as nonprofits and politics feel more intertwined than ever, their fundraising isn’t. The differences between 501(c)(3) and political campaign fundraising are stark, and it’s crucial to understand the nuances before you start raising money for either group. 

In this quick guide, we’ll cover the core fundraising differences between nonprofits and political campaigns and how new fundraising professionals can navigate them.

Fundraising laws and regulations

Fundraising is highly regulated, no matter what group you’re collecting donations for. However, the laws and regulations that govern fundraising are not the same for nonprofits and political campaigns. 

Each group must comply with different restrictions related to:

• Tax-exempt status: Nonprofits are classified as 501(c)(3) organizations, which allows them to remain exempt from taxes and collect tax-deductible donations. To keep this status, they must follow certain IRS reporting requirements, comply with activity restrictions, and use revenue on mission-related activities. Political campaigns are not tax-exempt, so they have different spending and reporting requirements. 
• Contribution limits: Depending on their election level, political campaigns are subject to limits on how much money they can accept from certain groups and individuals. Federal campaigns, for example, have contribution limits for individuals, Political Action Committees (PACs), and party committees. Nonprofits do not have contribution limits, though there are restrictions on how much individual donors can receive in tax deductions.
• Financial transparency: Both nonprofits and political campaigns must file reports about their fundraising and spending to remain transparent. However, they have different filing requirements. While nonprofits must file Form 990 with the IRS (among other reports), political campaigns report financial data to the FEC, state, or local election authorities, depending on their race.

Campaign finance laws vary widely by election level, race, and state. Those working on political campaigns must check with their relevant election authorities to verify what requirements apply to them. 

Nonprofit regulations are mostly at the federal level, but there are some state-by-state requirements. For example, most states require nonprofits to complete a charitable solicitation registration before fundraising.

Funding sources

From crowdfunding and grassroots support to major gifts and in-kind donations, both nonprofits and political campaigns rely heavily on individual contributions. However, each group also has access to additional funding sources.

Most political campaigns can also accept funding from PACs, labor unions, and other groups, while nonprofits can uniquely accept:

• Government and foundation grants: Federal agencies and private foundations provide grants to eligible nonprofits, often with stipulations. To secure and retain a grant, nonprofits must apply for it, use the money according to the grant’s requirements, and report how they spent the funds to the grantmaker.
• Corporate philanthropy: Nonprofits can tap into multiple corporate philanthropy opportunities that political campaigns can’t. This includes matching gifts, volunteer grants, corporate sponsorships, and more.
• DAF grants: Donor-advised funds (DAFs) are charitable giving accounts opened by individuals at community foundations or national banks. All contributions to DAFs are tax-deductible, so donors can request that their DAF provider grant money to nonprofits but not political campaigns.

It’s also important to note that nonprofits cannot donate to or support political campaigns. To retain their 501(c)(3) status, nonprofits cannot attempt to influence elections in any way, such as by supporting a specific candidate or encouraging donors to vote for them. They can still participate in advocacy and even some lobbying activities, but they cannot endorse specific candidates.

Core strategies and timelines

Because they have different goals, nonprofits and political campaigns naturally approach fundraising in fundamentally different ways.

Political campaign fundraising is more time-intensive since all their efforts lead up to Election Day. Candidates are bound to the cyclical nature of elections, meaning they typically start fundraising all over again with each campaign (with the exception of some campaigns that do fundraise year-round to keep email lists warm and prepare for reelection efforts). They use strategies designed to raise money quickly, like call time, email programs, text banking, and digital campaign advertising.

Nonprofits, on the other hand, fundraise on an ongoing basis. While they do run time-bound fundraising campaigns and typically set revenue goals annually, they rarely have hard deadlines. They can use fundraising methods like advertising and text banking, but they tend to rely more on long-term strategies like peer-to-peer fundraising, online campaigns, annual events, and direct mail marketing.

Because nonprofits must sustain themselves long-term, they also have to fundraise with an eye toward the future. This means they should have reserve funds, invest in fundraising technology that can scale with their growth, and consider how to allocate funding to make the most substantial impact over time.

Approach to donor relationships

Naturally, having different fundraising timelines means nonprofits and political campaigns see donor relationships differently, too. Relationship-building is important to both groups, especially when it comes to the major donors who provide the most impactful contributions. 

Both political campaigns and nonprofits typically steward donors by:

• Sending timely donation acknowledgment emails.
• Thanking donors often and via multiple different communication channels.
• Tracking individual preferences, giving habits, and interests to improve engagement.
• Sharing personalized impact updates detailing how the nonprofit used their donations.
• Inviting donors to volunteer, attend events, or get involved in other ways.

However, nonprofits go beyond this to conduct extensive, ongoing outreach throughout the entire donor journey. In addition to the above points, they might also:

• Design thorough stewardship plans for mid-level and major donors.
• Send holiday, birthday, and giving anniversary messages.
• Encourage donors to provide feedback via surveys or interviews.

Donors give to political campaigns and nonprofits because they hope the organizations they support will enact change that aligns with their values. For nonprofits, this means donor relationships are built on your ability to make an impact on your mission, while political candidates must listen to their constituents to enact policies they believe in.

Despite their differences, the core tenets of fundraising for nonprofits and political campaigns remain the same. Both groups make personalized appeals, use multichannel strategies, and leverage storytelling to make a compelling case for support. Additionally, relationships with donors and volunteers are at the heart of every fundraising campaign, no matter its goals.