As far back as Ancient Rome, philosophers have praised anonymous giving as a sign of humility and high moral stature—it keeps attention on the charity and the gift’s impact and removes ego and publicity from the equation. Today, there are even more reasons donors may choose to remain anonymous, including a fundamental expression of First Amendment rights, protection from threats or “cancel culture,” or simply a desire to avoid unwanted communications or further requests for funding.
Embracing anonymous donations can unlock new avenues for support, but it can also present distinct challenges. Understanding the options, potential drawbacks, and possible solutions can help you leverage these gifts going forward.
Popular anonymous giving methods
Donors who value their privacy have a variety of suitable gift options but obviously still need to satisfy legal requirements to claim tax deductions. According to the American Endowment Foundation, the most popular ways to give anonymously include the following:
Cash. This easy, immediate gift option can work for those seeking to protect their personal information from the public (and, in some circumstances, from the charity itself). The donor can give cash directly (requesting privacy from the organization, which is not guaranteed) or through an intermediary (securing increased anonymity). The donor or the intermediary must request written confirmation of the gift from the charitable organization before the donor can claim a charitable income tax deduction.
Cryptocurrency. Similar to cash, cryptocurrency allows donors to support charitable causes and limit the disclosure of their personal information. A donor can send cryptocurrency directly to a qualified charity’s wallet. To receive a tax receipt, however, the donor must provide contact information, such as an email address. Another option is to use a payment processor to transfer currency through a broker, allowing the donor to receive their tax receipt anonymously.
Donor-advised funds (DAFs). DAFs are arguably the most popular vehicle for anonymous gifts because of their flexibility and streamlined giving. DAFs allow donors to claim an income tax deduction in the current year while retaining the right to recommend grants from the DAF over time, providing a good way for donors to segregate funds they’re setting aside for charity. DAFs also provide an easy way to donate more complex non-cash assets, including cryptocurrency, closely held stock, and real estate. Donors who value privacy might seek out special anonymous DAF hosting platforms like Silent Donor (approved by the IRS in 2022) that route donations to nonprofits without revealing sensitive donor information.
Revocable living trusts. Though revocable living trusts already offer privacy from the public by avoiding probate in most instances, they are probably the most complicated gift option for keeping the donor’s identity from charities. To be truly anonymous, a revocable living trust must have:
• its own separate taxpayer identification number so that it can’t be easily tied back to the donor
• a generic name that does not include any personal information that could be tied back to the donor
• a trustee who is not also the donor
Due to the complexity of trusts, the donor will need to consult with their legal counsel to make sure an anonymous donation will be eligible for an income tax deduction.
A technical note about Form 990
For certain tax-exempt organizations described under Internal Revenue Code Section 501(c), the IRS does not require the disclosure of donor information such as names and addresses on Form 990.
For tax-exempt groups organized under Section 501(c)(3) or Section 527, donor information must be reported on Form 990 but can be redacted before publication.
Potential challenges and solutions
1. Lack of visibility and recognition
While anonymity can be empowering for donors, it makes it difficult or impossible for nonprofits to recognize and thank contributors and cultivate a lasting relationship.
Solution: Develop respectful methods for acknowledging and thanking anonymous donors. While you typically won’t be able to make direct contact, you can still show your appreciation by acknowledging the gift in a newsletter or article and highlighting the positive impact it had on your organization’s work.
2. Impact on Fundraising Efforts
For nonprofits reliant on public recognition to inspire further giving, anonymous donations may present a hurdle. The absence of visible donors can dampen fundraising efforts and make it challenging to demonstrate community support to potential contributors.
Solution: Utilize stories from those you serve to directly illustrate the positive impact of the gifts you receive—anonymous or not. This is a great way to display your organization’s tangible accomplishments while keeping your message focused on your mission and work. Sharing powerful stories with known supporters cultivates strong connections and may even encourage more gifts.
3. Trust and Transparency Concerns
In an era where transparency is paramount, anonymous giving can raise questions about accountability and trust, potentially eroding confidence in the organization’s financial practices. A well-known example of this is the scandal surrounding MIT’s concealment of gifts from Jeffrey Epstein, who personally gave $850,000 to the university and facilitated gifts of $7.5 million from other sources.
Solution: Demonstrate transparency through detailed reporting and communication. This can include disclosing the percentage of funds received through anonymous donations and how they are utilized. One of the biggest challenges when it comes to accepting anonymous gifts, though—there may be times when the prudent choice is to not accept a gift that has the potential to harm your organization’s reputation.
For certain donors, anonymous gifts are the best way to alleviate privacy concerns while still furthering your mission and impact. With thoughtful and sometimes creative approaches, you can acknowledge these gifts publicly in a way that shows gratitude to the donor and keeps the focus on your important work—a win for all involved!
