By adecker@hubspot.com (Allie Decker)

Nonprofit fundraising is exciting. It’s the lifeblood of charitable organizations and can serve as a way to raise awareness of a cause and drum up interest among donors.

Fundraising is also a massive undertaking. Because it’s likely your primary means of income as a charitable organization, raising money can be a burdensome, never-ending effort. It can even seem scary.

But it shouldn’t. Great fundraising can (and should!) be learned and mastered. Building a nonprofit fundraising plan is the best way to equip your volunteers, avoid fundraising pitfalls, and create a sustainable organization.

That’s why we built this guide. Below, you’ll read about the legalities of nonprofit fundraising, the different ways to raise money, and how to build a simple fundraising strategy. Keep reading to get started or use the chapter links to jump ahead.

Nonprofit organizations can be philanthropic, religious, educational, artistic, or scientific in nature. Some churches and universities qualify as nonprofit organizations as they don’t keep a profit — any money received is spent on its cause or on maintaining the organization itself.

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Fundraising is often the primary means of revenue for these organizations. That’s one reason why nonprofits and charitable organizations dedicate so many resources to it.

The other reason is to meet the requirements of the public support test, among other nonprofit fundraising rules.

To qualify as a 501(c)(3) tax-exempt organization (meaning, donations are tax-deductible with a donation receipt), a nonprofit organization has to receive a “substantial portion of its income” from the public … hence the public support test. Non-exempt organizations can still raise money, but their donors won’t be able to write off their donations as a tax deduction.

Nonprofit fundraising is heavily regulated by state law. This holds organizations accountable for how they approach and treat donors, and it ensures donors are giving money to the proper parties.

Before soliciting any donations, organizations must register with the state government in whichever state they’re operating. If the organization goes to another state to fundraise, they’ve got to register there, too. Also, if an organization hires a fundraising consultant or grant writer, he or she must also register with the state. (TL;DR: Fundraising requires lots of registration.)

Cause-related marketing, also known as commercial co-ventures, are also regulated by law. Commercial co-ventures exist when a nonprofit organization makes an arrangement with a business to receive a percentage of sales. This also refers to when two charitable nonprofits that agree to sell something together and jointly benefit from profits. We talk more about these below.

Overall, all nonprofit organizations should follow ethical fundraising practices. The IRS doesn’t enforce specific structural policies, but it highly encourages certain management and operational practices so organizations can better “obey the tax laws, safeguard charitable assets, and serve charitable interests”.

Note: This legal information is not the same as legal advice, where an attorney applies the law …read more

Source:: HubSpot Blog

      

Author: Aaron