Fundraisers FAQs
Here are some of the most common questions we get about Fundraisers. If you don't get an answer here, just contact us and we will get back to you right away.
Do I have to be a Non-Profit to Fundraise?
Any legal entity can do a fundraiser, in some cases even individuals. Their are some things to pay attention to though.
Are you doing pre-sales of a product or service, are you fundraising for investors to buy equity or are you soliciting donations to your for profit company.
All of these are fine and legal, with certain limitations on amounts. Check with an attorney and/or your CPA to get a full explanation.
You do have to make sure the contributor knows that this money is being given to a for profit organization. It is not tax deductible and as always, funds must be used for the purpose of what they were donated for.
You need to send a receipt and declared all donations as income.
Does your fundraising sale require "door-to-door" solicitation?
For some people, fundraising has mistakenly become synonymous with the term "door-to-door sales." In fact, most product fundraising sales are made to parents, family members, friends and close neighbors. A successful fundraising drive does not require volunteers - young or old - to canvass neighborhoods. Volunteers and Staff are very involved with these programs, often soliciting support from family, friends and co-workers.
How soon can a nonprofit start fundraising?
If you’ve just started a nonprofit organization but you’re still waiting on your 501(c)(3) status, you can still fundraise.
However, those contributions aren’t tax-deductible until you are officially registered as a charitable organization.
According to the experts, it’s wise to wait until you’ve received your 501(c)(3) status from the IRS.
Are there any rules about how much fundraising a nonprofit has to do?
Actually, yes!
Public charities have to receive at least a third of their support from the general public.
This means that your organization can’t rely too heavily on contributions from your staff members, founders, or board members.
Are incentive programs essential for motivating volunteers? What's appropriate?
Organizations eager to reach their goal often add an "incentive program" to their fundraising effort. Although the fundraising goal itself is motivation enough for some volunteers, prize or award programs can contribute significantly to the success of a program. Incentive programs are designed to encourage and reward participation and add an element of fun, encouraging broad participation of volunteers so that the burden of meeting the organization's goal does not fall to a dedicated few. Indeed, the majority of fundraising prizes actually distributed today are simple tokens (stickers, pencils, pens, etc) to recognize participation.
It is important that school administrators and parent groups work closely with fundraising companies to ensure incentive programs are appropriate for their students. As stated in AFRDS Standards for Professional Practice, companies should be sensitive to the potential negative impact of placing undue emphasis on sales incentives.
Why should your company benefit from our fundraising efforts?
Our Company provides products and services to help schools, churches and other non-profit groups. The portion of the gross proceeds that go to the Company cover the company's costs of doing business, including: 1) the costs associated with services, such as implantation, management and troubleshooting; and 2) a fair profit so that the company can provide appropriate and reliable services year after year.
Fundraising Products & Companies
Choosing a fundraising company is an important choice. Below you will find a link of various types of product based fundraisers, as well as information about how each type of fundraiser works.
We included other fundraising companies so you can compare what we do to everyone else. You can offer Healthcare as ongoing fundraiser or you can sell candy bars one month, candles the next and so forth and so on.
Here’s a listing of companies offering each type of fundraising product. We encourage you to research the company you plan to use well and ask lots of questions before signing on with any fundraising companies.
Fundraiser Directory: http://www.fundraiserinsight.org/directory/
To Non-Profit or Not to Be
Wondering if your group needs to formally incorporate as a nonprofit organization before you can fundraise? Friends, we are here to tell you that the answer is a loud-and-proud: NOPE!
While incorporating can certainly have its advantages (including enhancing credibility and limiting liability), community groups can still raise the resources they need without becoming bona fide 501(c)3s.
In fact, we think one of the all-around best methods of fundraising has nothing to do with getting a nonprofit designation. What is this great gift to the grassroots, and how can you put it to work for you?
Startup nonprofits often wonder if they can raise funds before they receive their tax-exempt status. For instance, one reader asked:
"I want to start a nonprofit for single parents with a employment staffing component to it, along with a liberal housing and education arm. Is there a way to fundraise in an effort to obtain the startup funding without having forwarded the IRS forms for nonprofit status approval? The operational funds are what our agency would need."
I invited Emily Chan, a San Francisco-based attorney who specializes in nonprofit, to explain. Here is her answer:
"Organizations can fundraise before receiving 501(c)(3) tax-exempt status. However, those contributions are not tax-deductible.
If the organization is subsequently granted exemption and the date of exemption precedes the date of the contribution, the donor may then be eligible to take a tax-deduction for that contribution which may require an amendment to that donor's personal tax return.
Exemption is generally retroactive to the date of incorporation if the application is filed within 27 months of incorporation.
Otherwise, exemption is recognized as of the date the application is filed.
Organizations should not give tax advice to donors but should inform donors they are not recognized as tax-exempt and the application is pending (if applicable). They should not say that they are certain to receive 501(c)(3) status.
Do I need to register my non-profit with the State?
If your nonprofit organization requests donations from residents of any one of the 40 states that require nonprofits to register in order to solicit contributions, you need to know about nonprofit fundraising registration. In the past, nonprofits may have been able to get by while letting these requirements slide, but the IRS and state governments are cracking down. And chances are your nonprofit will be affected by these registration rules, since they're on the books in every state except Arizona (repealed registration laws in 2013), Delaware, Idaho, Indiana, Iowa, Montana, Nebraska, South Dakota, Texas, Vermont, and Wyoming.
Subject to some important exceptions that you should know about, all states other than the 11 identified above require nonprofits that solicit contributions from state residents to register with a state agency. Solicitations can include any type of requests for donations by mail, phone, advertisement, email, or Internet, regardless of whether your nonprofit actually receives any donations. States That Require Fundraising Registration as of this writing.
Alabama
Hawaii
Mississippi
Oklahoma
Alaska
Illinois
Missouri
Oregon
Arizona (repealed 2013)
Kansas
Nevada
Pennsylvania
Arkansas
Kentucky
New Hampshire
Rhode Island
California
Louisiana
New Jersey
South Carolina
Colorado
Maine
New Mexico
Tennessee
Connecticut
Maryland
New York
Utah
District of Columbia
Massachusetts
North Carolina
Virginia
Florida
Michigan
North Dakota
Washington
Georgia
Minnesota
Ohio
West Virginia
Wisconsin
You don't just have the IRS to worry about. If you don't register in a state where you are required to, you are breaking that state's law. States may impose fines and other penalties on nonprofits that fail to register. These fines can be substantial. For example, Pennsylvania imposes a minimum $1,000 fine for failing to register. Moreover, the state may order your nonprofit to cease soliciting donations within the state until you register there. If you have a question about a particular state just do a simple internet search, such as "Non-Profit Registration State of Kentucky".
How to Register Your Nonprofit with the State
Registration involves filing an application with the appropriate state agency and, in most states, paying a registration fee. You'll usually have to provide financial information with your application. Often, this can be a copy of your most recent Form 990. Registration usually consists of two parts: an initial registration application and an annual renewal/financial reporting requirement.
Unfortunately, there is no single national registration application that works in every state. Instead, your nonprofit must individually register with each state where it is required to do so, following that state's particular requirements. These requirements differ from state to state -- sometimes dramatically -- so the more states you fundraise in, the more registration work you will have. Even the name for registration varies depending on what state you're in -- in some states, it's called a registration statement; in others, it's called a license, solicitation permit, or certificate.
Your Nonprofit May Be Exempt from Registration Requirements
Fundraising registration can be a hassle, but many types of nonprofits are exempted from most states' registration requirements. Most states exempt nonprofit hospitals, educational institutions, religious institutions, and very small nonprofits from the fundraising registration requirement. A few states also exempt nonprofits that receive contributions from less than a specified number of state residents. For example, Michigan exempts nonprofits that receive contributions from ten or fewer people during the year.
If your nonprofit is fortunate enough to fall into one of the exempt categories, your registration burden will be greatly lessened or even eliminated. Unfortunately, determining whether your nonprofit is exempt can be difficult. The list of exempt nonprofits varies from state to state. Thus, a nonprofit can be exempt in one state but not another. For example, a nonprofit that receives contributions under $25,000 per year is exempt from registering in New York, but not in California. This means that you will have to look at the laws of each state to see if an exemption applies to your nonprofit. In addition, in 12 states, exemptions are not automatic -- a nonprofit must have its exemption confirmed by the state charity office.
Ready? Let’s start fundraising!
Getting started is easy, just complete the contact form below and we will get back to right away to structure an easy, fast and fun fundraiser with our Telemedicine products. Our fundraiser is designed to literally generate thousands of dollars each and every month, all the while providing a much needed service to your community.
Health Alliance Network and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.