Invoice vs. Letter Membership Renewals–Downtown FUNDRAISING Minute

Another Downtown FUND RAISING Minute.

Invoice vs. letter membership renewals

In fall of 2010 I was working with Gayla Roten, State Director of Missouri Main Street Connection doing a day long workshop on a variety of fund raising topics for the local Main Street managers. Our morning was centered on annual gifts and sponsorship, the afternoon devoted to “friendraising” (rather than fund raising) and an introduction to Major Gifts.

During the morning session someone asked a question that I get often about the actual renewal notice that is sent to those who give annual gifts to the organization (aka members).  This person asked:  Can the renewal be an invoice?

Just this past week Tony Rossell whose Membership Marketing Blog (www.membershipmarketing.com) which I find extremely useful, wrote about just this thing.

Tony notes that there is an important legal distinction between an invoice and a renewal. Tony says:

“An invoice is a bill sent by a provider of a product or service to the purchaser. The invoice establishes an obligation on the part of the purchaser to pay, creating an account receivable.”1

“However, when a membership is up for renewal, there is no obligation to pay and no account receivable. The member has not received anything and has the option to pay, but no legal obligation to pay. Therefore, a renewal notice is not an invoice and cannot use the word “invoice.” “

If you want to read the rest of Tony’s post from March 22, 2010, check his web site. 

Memberships in most downtown organizations are charitable gifts.  Invitations to rejoin each year do not create an obligation to pay. Downtown organizations that use letters that look like membership invoices for renewals may create hard feelings from supporters.  Membership renewals are a vital part of any nonprofit organization’s cash flow.  Getting renewals out on time, according to a renewal calendar and tracking results is an essential part of reinforcing loyalty to the cause. We will talk more about membership renewals in the weeks ahead.

Next week:  Yearlong sponsorship packages