What to Know Before Your Nonprofit Starts Fundraising

//What to Know Before Your Nonprofit Starts Fundraising

What to Know Before Your Nonprofit Starts Fundraising

It’s safe to say that people aren’t afraid to give. A report by Qgiv found that 69% of Americans give to charities monthly or annually. Individuals made nearly 72% of those donations as opposed to foundations, including individuals who make less than $25,000, who are donating the most significant share of income to charity.

Despite your best intentions and people’s willingness to give, before your nonprofit launches fundraising efforts, know the laws. State law regulates these laws. As complicated as it may seem, the effort is indeed worth it. Here’s what you need to know before your nonprofit kicks off its fundraising season.

 

Fundraising is Regulated

There is a little more to raising money for your nonprofit than just asking people to write a check. The IRS has specific fundraising guidelines that you must adhere to. Additionally, you must register with your state’s government for charitable solicitation. The US Department of the Treasury offers voluntary best practices for U.S. based charities to ensure that you’re practicing and soliciting ethically and under the law.

 

You Need to Apply for Tax Exempt Status

Nolo, a legal resource, notes that even if your nonprofit is incorporated, you’re still not eligible for tax-exempt status until you apply. This critical step in forming a nonprofit organization is essential to reap the real benefits of being a nonprofit.

Within 27 months of your nonprofit filing for incorporation, you should be filling out your form 1023, which is the federal tax exemption application. You’ll need to provide necessary information like the organization’s name, contact information, as well as your incorporation verification documents. You’ll also need to provide a narrative description of your activities along with members and others that receive benefit from your nonprofit.

You Need to File the Right Paperwork

You’ll need to file the right paperwork before starting your nonprofit and you’ll need to know how to file your nonprofit articles of incorporation. Depending on the state that you live in, your paperwork requirements will vary. However, each state does have a few things in common. Typically, you will need your nonprofit’s name, the name and address of the founder, as well as any of the board members along with the nonprofit’s statement of purpose.

Additionally, you will need to provide your written bylaws which act as your organization’s manual. These laws should state your purpose, membership rules, board guidelines, and other legal matter like conflicts of interest. They’re an important component of starting a nonprofit.

 

Fundraising is About Crossing Gaps

When you’re raising money for your nonprofit, it’s not about convincing people that they need to give your organization money; it’s about crossing empathy gaps. Your mission is to point out to people where your organization’s mission and their passion overlap. They may be passionate about pets but may be unable to take in a shelter pet; fortunately, your organization helps home and re-home at-risk pets. By them giving your organization money they are indirectly supporting the pets they can’t physically or directly help, thus crossing the empathy gap.

 

Should You Start Fundraising?

Yes! It might seem like an enormous feat and, yes, some administrative and clerical tasks are required. However, the reward for helping those in need is far more significant. If you’re still not sure about paperwork, legal terms, and state laws, contact the certified public accounts at DCA. Offering a broad range of accounting, tax, and valuation services for both businesses and nonprofit organizations, contact us today to find out how we can help you get certified.

 

PHOTO: Howard Lake, Flickr / CC-BY SA 2.0

By |2018-08-28T16:39:29-05:00August 31st, 2018|Small Business|0 Comments

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