Fundraising, Finances, and your Future

At the Catalyst Center for Nonprofit Management we are planning for this year's seminar topics.  When we look at the popular topics for past sessions, fundraising is always the most popular.  Topics around managing your finances are not as popular.

Why is this?  Fundraising seems to promise the possibility of more money.  Fundraising can increase revenues.  It may be also assumed that finances are harder to understand.  What is often overlooked is that financial management will impact your revenues and expenses.   Fundraising without proper financial management will be less effective.  You could increase revenues but still not increase your bottom line.

This article in the February 2014 issue of INC magazine tells the story of the Murder Mystery Company.  The business was growing rapidly but finances were out of control.  By getting a handle on the finances, the Company was able to decrease spending by tracking activity; capture revenue that they were losing; and develop a new revenue stream.

So as we look to the coming year we will still offer course in both fundraising and finances.  We hope to increase the attendance at the financial sessions.  We frequently get comments about our financial training from our attendees.  They note that the topics are taught in practical, easy to understand laymen terms.  We offer follow up assistance from our sister company the accounting firm Bee, Bergvall & Co.  Our goal is that our nonprofit community is better equipped to increase both the top line and the bottom line.

Fundraising Q&A-Auction Items

QUESTION:  What is the charitable contribution for the winning bidder of an auction item?

 

ANSWER:  The winning bidder of an auction item can take a deduction for the amount in excess of the value of the item.   For example, a bidder pays $80 for a $50 restaurant gift certificate.   Their charitable contribution is $30—the amount the price paid exceeds the value by.   If they bid $50 for the $50 gift certificate there would be no charitable contribution.

Another example,  the bidder pays $1,000 for a painting valued at $800.  The charitable contribution would be $200.

The other side of this question is—what is the charitable contribution for a donor of an item that will be used in the auction?

The donors charitable contribution will not be noted by the nonprofit.  The letter from the nonprofit should say thank you for your donation of (describe item) with no mention of the value.  The donor should determine the value.  The donors charitable deduction is limited to the donors cost for the item. 

For example, the donor asks the restaurant to donate a $50 gift card.   The gift card sells for $100.  The donors charitable contribution is zero.   If the donor purchased the gift card for $50 and donated it to the auction, their charitable contribution would be $50.

In the painting example, the artist who donated their own painting that would normally sell for $800 at a gallery, gets a charitable contribution only for the supplies—paint, canvas, etc.  Their time is not valued.

 

Fundraising Q&A-What can a participant deduct for a special event?

QUESTION:  What can a participant deduct for a special event?

ANSWER:  The general rule for special events is that participants can take a charitable deduction for the part of the event fee that exceeds the benefit to the participant.  For example: if a dinner ticket to an event in $150 per person and the value of the dinner is determined to be $100, the attendee can take a $50 charitable deduction.  It is the responsibility of the nonprofit to notify the attendee of the value they received.  This is an IRS requirement when the value received by the participant is more than $75.

QUESTION:  How should the nonprofit notify the participant of the value of the special event?

ANSWER: There are several ways a nonprofit can do this.   The notice can be printed on the ticket to the event.    $50 of this ticket price represents a charitable contribution.      It can be part of the text of a follow up thank you note from the event.   Thank you so much for joining us as we celebrated 25 years of fighting poverty.  We raised over $30,000 at our event.   Please note that the FMV of the dinner was $100 and  $50 of the ticket price is a charitable contribution.

Fundraising Q&A-PANO Resources

Over the summer Liz and I presented the popular PANO session-Fundraising Practices: Track It Right! Book it Right! Report it Right!  at the beautiful historic site Pennsbury Manor, right on the Delaware River.   The audience was very engaging and had a number of great real life stories of transparency in fundraising.    Some good questions came out of the session and I’ll share them in the next few posts.   

The great part about teaching the session is that we talk to the group about best practices in fundraising and PANO has a treasure trove of resources to help nonprofits follow these best practices.   These resources are available free to members or for a small fee ($10 to $15) for nonmemebers  at the PANO website.   There are sample policies, guidelines, and procedures that will save you time and frustration.    You can order the materials here.   Select Educational Resource Packets.

What We Can Learn from the Dodge Dart Registry

The Dodge Dart commercial aired last night while we were watching TV (watch it here).   "Dad buys the engine. Grandma buys the rims.  Family and friends kick in and when its fully funded, its yours!"   We initially thought it was a spoof on the bridal registry.  But its real.   Check out the site here  

As the commercial ran and "100% funded" flashed across the screen--I didn't think bridal registry though--I thought nonprofit fundraising.  Give people something tangible to be part of and experience.  Several organizations already do this in varying ways.

Samaritans Purse

Habitat for Humanity

Compassional International

and our local Twilight Wish

How can you create an image of what you do and have donors invest in parts of the whole?