By Rachel Pleasant
Staff Writer

Those who open their hearts and wallets are also, in many cases, attaching specific instructions on how their charitable donations will be spent.

That is according to the results of Blackbaud’s second annual State of the Nonprofit Industry survey, which was released in three parts over five months.

According to the final installment of survey results, 48.3% of the respondents to the survey said they have seen an increased demand among donors to have contributions restricted to a certain purpose. More than 1,000 nonprofit professionals participated in the survey.

The trend toward “here’s my money, but here’s how I want it spent,” is the result of several factors, Blackbaud said in a press release, including an increase in disaster relief funding, a demand for accountability and transparency among nonprofits, and simple personal preferences.

At Trident United Way, spokesman Barry Waldman said the increased demand in restricted donations is an example of the changing consumer culture.

“Consumers of any kind in this country want control of their money. Twenty years ago, we had five TV channels, and you watched whatever commercials were on. Today you have 500 channels, and you TiVo what you want to watch and then you skip the commercials. Just like that, consumers want control over how their donations are used, and consumers are demanding results,” he said.

The increased donor involvement in spending is changing the way the nonprofit industry operates, Waldman said.

“Nonprofits have to operate like businesses. Those that can’t will cease to exist. Fifty years ago, people contributed to a charity and that was the end of it. Increasingly, people want to know what is being done and is it really helping the community.”

According to the survey, those most likely to give restricted donations tend to be older and have higher incomes; 54.2% of the non-profit participants said high-income donors are most likely to give for certain causes; 72.3% said those 35 and older put restrictions on how their money will be spent. Meanwhile, only 34.4% said first-time donors give restricted donations.

The residual effect of all those restricted donations, the survey found, is that nonprofits are searching for ways to cover their general operating expenses.

According to the survey:

• 44.9% of participating nonprofits are seeking unrestricted gifts.

• 30.2% are seeking foundation grants to cover operating expenses, and 33.4% are seeking non-grant revenue to cover those expenses.

• 14.4% are going after government grants to cover operating expenses.

In other survey findings, nonprofit organizations said that accountability is the most important issue facing their industry. Of the respondents, 45% said accountability to donors and regulatory bodies is among their top concerns.

In an effort to be more accountable, 77% of nonprofits said they are communicating proactively to donors on how contributions are spent; 95% said they have secured audited financial statements and 70% have formed audit committees.

Also on the minds of nonprofit professionals is recruiting and retaining donors, with 64% saying those are their biggest challenges.

That is the case for Charleston Habitat for Humanity.

“The thing that we run into sometimes is that people have already chosen an organization or a charity of choice, and it’s hard to get them to donate to us,” said Kelly McElmurray, volunteer and family services coordinator, adding there are five Habitat for Humanity affiliates operating in the Charleston area, meaning sometimes Habitat is competing against itself.

To help with that situation, McElmurray said, Charleston Habitat has recently included the other Habitat affiliates in its events.

Still, she said, convincing donors to give to Habitat’s cause is no easy job in the Charleston area.

“It’s pretty tough to get people excited about it. I don’t think people are aware of the poverty here. They aren’t subject to the poverty all the time, and unless they go into the neighborhoods and see the rundown trailers and the people who don’t have adequate electricity, they can ignore it,” she said.

Finally, the survey looked at the role of technology in the nonprofit industry and found that 90.3% of organizations consider the Internet a critical tool in running their organizations but only 34.6% are raising money online. Meanwhile, 73.7% continue to use direct mail to communicate with donors.

The survey also found that 60% of nonprofits expect an increase in face-to-face donor communications, and 52% of respondents said one-on-one solicitation is still the most frequently used method.

“We do a lot of communication over the Internet, but we raise virtually nothing on our Web site. We want more of a personal touch. The Internet is a great tool, and we do conduct some campaigns through the e-mail and the computer, but we always want a personal connection,” Waldman said.

Blackbaud, headquartered in Charleston, is a global provider of software and related services designed for nonprofit organizations.

Rachel Pleasant is a staff writer for the Business Journal. E-mail her at rpleasant@charlestonbusiness.com.

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