A suggested donation is nothing more than a way of asking for payment without forcing people to empty their pockets. There’s reason for this, the most common reason being that the organization in question has 501(c)(3) status, and as such, they must justify any income with the IRS. As a charitable or non-profit organization under § 501(c) United States Internal Revenue Code, they must be able to say "well, we aren’t excluding anybody from our (exhibit, bake sale, concert, play, orgy, beer chugging contest, whatever), because we don’t charge admission, and therefore we are acting in the public’s best interest." If they started to charge people, they would have to try very hard to justify that with the IRS in order to keep their 501(c)(3) status.
If an organization loses their 501(c)(3) status, then they can kiss their donations goodbye. If you ask for charitable donations, and you don’t have 501(c)(3) status, you’re going to get a big fat "fuck you" from most people you ask. This is because donations to 501(c)(3) organizations are tax-deductible, whereas your donation to Crazy Larry’s Unlicensed Breast Cancer Foundation & Women’s Wellness Center (with free breast cancer screenings done by Crazy Larry himself) is not tax deductible. Anyway, back to the topic at hand: the suggested donation.
Some places will try to coerce a "suggested" donation out of you. It’s not uncommon to hear one (or all) of the following phrases when you try to sneak past the suggested donation box:
"Sir, we strongly suggest a donation of $6 if you want to find a good seat"
"We really encourage you to give the suggested amount, otherwise you support the spread of AIDS"
"We really recommend that you donate, otherwise we’ll take a bat to your frail and bird-like knees, you old miser"
Strongarm tactics like this jeopardize the tax-exempt status of whatever charity you’re taking advantage of by being a stingy fucker, and if you’re affiliated with any sort of not-for-profit or charity organization that employs the "suggested donation" system, it’s probably a bad idea to try to guilt people into turning their pockets out for you. On the other hand, if someone just breezes past the donation box, it’s not taboo to remind him or her that anything they can spare will go entirely to (insert charitable cause here). If it all goes according to plan, that phrase should instill a deep sense of guilt in the heart of the person you’re asking for money, and it will compel them to give all they can.
Sometimes, a suggested donation is just that: a suggested donation. Things like student-run car washes, bridge club bake sales, gun club cookouts1, weight watchers pie eating contests and anything else not related to any charitable or community organizations aren’t legally obligated to "suggest" payment rather than ask for money outright, but in some cases they will choose to suggest donations in order to make their little fundraiser more "community friendly", which is secret code for "guilt trip people into giving us lots of money so we can buy more football uniforms while we ignore the extreme shortage of science books".
The bottom line, if someone suggests that you donate, just cough up the clams. You can always get your money’s worth by consuming the majority of the snacks that have been set out on the card tables at whatever event you’re attending (even though the cold cuts are really dry and gross).
Addendum: in response to the numerous questions regarding benefit dinners for $100/plate and expensive gala events, non-profits are allowed to hold these, because the income from these events are still considered donations, and they are classified as related income. They need to have a rather complex note posted somewhere that outlines exactly how the money is spent, and what portion is tax-deductible (these economic specifications are usually disregarded, though). The thing is, these events are pure fundraising, and the events themselves aren't really for the benefit of the public. The proceeds, however, are going to the charity cause, whatever it may be. That is why non-profits can hold expensive gala events. Credit for this information goes to my lawyer coworker.
(1) Addendum the second: Chase says In your last writeup you denegrated gun club suppers as not perhaps being tax exempt. There are actually quite a few clubs in this country that are indeed tax exempt because they do promote community and stuff. In fact, the ATA is indeed a trapshooting org that is a non-profit. So, no offense, but please pick your examples carefully.
Newsflash: I’m no lawyer. I’m not a paralegal. Shit, I don’t even like the law. If you know what you’re talking about (unlike me), msg me and tell me how wrong I am. I will correct myself, giving credit where credit is due. A great big thank you to all those who have msg'd me regarding the factual contents of this writeup.