Dennis Fischman, Author at Communicate!

TY Thursday: 3 Annual Reports that Thank Donors

July 1, 2021 by Dennis Fischman Leave a Comment

With a good annual report, you can make donors feel thanked and valued. And when you do, you will create loyal donors and inspire renewed donations.

Why Annual Reports Matter

When a donor sends a gift to your nonprofit, they want to know these things:

You received the money.
You appreciated the donation.
You used it well.
It made a difference.

Not unreasonable of them, right? When you’re a donor, you probably want to hear about the same things. But the information that donors want is not going to get to them by accident. Your nonprofit has to make a deliberate effort.

They have questions. How do you let them know the answers ?

A great thank-you letter or email is the first step to letting donors know you are grateful. Then, communications throughout the year can reinforce your message that they are heroes making the difference.

Your annual report can pull it all together. By showing how you spent money and how it helped real people to live better, you can make the case that giving to your nonprofit was a good decision…and help the donor to make that decision again.

Three Ways to Create Annual Reports

Brochure

Provide sent my wife and me a colorful tri-fold brochure. One side of the brochure focuses entirely on impact. “Over 1,500 providers trained,” it says, and then it:

Tells us what happened after the training: more healthcare and social service providers referring their patients for abortion, at more sites, sharing the information they’d learned more broadly.
Shows how immensely satisfied participants were with the training.
Quotes a participant bout what they learned and how it made them feel.

In three seconds, I could tell what Provide was saying. In thirty seconds, I could see why it was impressive.

The flip side of the brochure was somewhat crowded with the classic pie charts about finances (too large) and verbiage about Who We Are, Who We Work With, and Who We Train (too small and in white on black, which is hard for middle- and old-aged eyes to read). But these sentences in the message literally stood out:

We see you.

We hear you.

We appreciate you.

Could your nonprofit use a brochure like this to send those messages to your donors?

Newsletter style

Partners In Health sent us an an annual report that looks a lot like the newsletters they send us regularly.

The downside of that approach is that at first, it didn’t seem like anything special. I nearly put it aside to read later–and you know what happens to most things that are put aside like that: they end up in the recycling bin, unread!

The strength of the approach is that it’s “on brand,” so if I am used to getting good information from Partners In Health, I will expect a similar good experience from this mailing.

The report uses photos to show the human impact of its programs and graphics to present the overall numbers. Both of those work well.

The text included in the report is less effective. Again, it’s too small, and it’s all “we” (meaning the organization). The only place you appears is on the donation form included with the report–and sends the message that they are doing all the good, and my only role is as a piggy bank, not a partner in health.

Could your nonprofit adapt your newsletter format for an annual report? And if you do, could you use fewer words in larger font and make the donors feel like a partner?

Flyer and personal note

The Greater Somerville Homeless Coalition grabbed my attention as soon as I opened the envelope because, on notepaper-sized stationery, they hand-wrote the message:

Dennis & Rona,

We value you

and the support you give us!

That emphasis on the donor continues onto the Coalition’s brochure, which starts out, “Clients arrive at our front steps in crisis. Your contribution opens the door…”

In fact, almost every time the brochure says “you,” it’s possible to read it as including you, the donor.

I appreciate you guys. You are doing frontline work right now.

You make the difference. Thank you for being part of the solution.

It is important for people like me, who can’t afford the rent, to have the kind of genuine support you give me.

Like Partners in Health, the Coalition presents its numbers in eye-catching graphics. But the Coalition’s annual report goes one step beyond what either of the other organizations did, because it tells us the story of one person and his children.

When donors ask, “What good did I do by giving to them?”, I don’t think they’re going to say “I sent 32,869 bags of groceries,” or even, “I housed 192 homeless clients.” I think they’re going to say, “I helped Johnnie and his children get out of the homeless shelter.”

Could your nonprofit touch the heart by including stories and personal notes in your annual report?

4 Best Practices For Staying Tax-Exempt as a Nonprofit

June 28, 2021 by Dennis Fischman Leave a Comment

A guest post by Mathew Tooker of File990

Receiving tax-exempt status is an essential part of getting your 501(c)(3) nonprofit organization off the ground. However, retaining that status requires an annual filing process to ensure your organization continues to spend its funding responsibly.

At File 990, we’re passionate about nonprofit taxes and equipping organizations with the tools they need to streamline basic accounting and tax processes. We also know that small to mid-sized nonprofits and community organizations often don’t always have dedicated tax professionals on staff. Yet your mission shouldn’t suffer for it!

In this guide, we’ll share the most critical information you need to know, including the foundations of IRS Form 990 and our tried-and-true tips for staying tax-exempt year over year. Let’s get started!

What is IRS Form 990?

IRS Form 990 is an annual tax form that is required of most nonprofit organizations. What’s the purpose of this form? To keep your organization tax-exempt and retaining your 501(c)(3) status.

When you file your 990, you provide key information about your nonprofit finances, including a summary of your activities and programming throughout the year, an overview of your governance structure, and a basic look at your expenses and revenue. This way, the IRS can look into your organization and ensure that your funds (including grants and charitable donations) are properly handled. Without it, your nonprofit risks substantial fines and, eventually, may lose your tax exemption.

However, completing your yearly 990 can do even more for your organization than keep your team up to IRS standards—it can function as a marketing tool for attracting and retaining generous donors. Upon completion, your Form 990 is publicly available, meaning supporters and prospects can have a look at your finances as well. When they see the good work your organization is doing as it is funded by generous gifts, they’ll be more inclined to give.

Tips for Retaining Tax-Exempt Status

Now that you understand the purpose of Form 990 and why the IRS requires you to file every year, let’s jump into our favorite tips for staying tax-exempt as a 501(c)(3) nonprofit.

1. Choose the correct form.

As a 501(c)(3) organization, you know you’ll need to file IRS Form 990. However, did you know that there are multiple versions to choose from?

Here’s a basic comparison between the four most common versions of Form 990 to help you determine the right one for your team:

990: This is the complete version of the form and must be filed by organizations with gross receipts of more than $200,000 per year.
990EZ: The next step down from the full version, the 990EZ is filed nonprofits with gross receipts between $50,000 and $200,000 per year.
990N: This is the most simplified version of the form and is only available to organizations with gross receipts of less than $50,000 per year.
990PF: The “PF” in this form stands for private foundation. As such, this form is filed by all 501(c)(3) private foundations regardless of financial status.

If you run a small to mid-sized nonprofit, you’re probably looking at 990N vs. 990EZ. These abridged versions are shorter and simpler to complete, which is a nice bonus!

Just because you’ve been eligible to complete the e-postcard (or 990N) in the past doesn’t mean you will be forever. If your organization has had a boost in revenue over the last year, it might be time to look into moving up to one of the more comprehensive forms to ensure you’re complying with IRS standards.

2. Submit your form before the deadline.

Once you’ve selected the tax form that is required of your organization, it’s time to determine the date by which you’ll need to submit your documentation. Take a look at our File 990 guide to the Form 990 deadlines that explains how to determine your organization’s deadline as well as consequences for failing to file and how to request an extension. Here are a few key notions to be aware of:

Your deadline for submitting your form is the 15th day of the 5th month after your fiscal year ends. For organizations following the calendar year, the deadline is May 15th.
You will be fined up to $100 per day that your return is late, with a maximum penalty of $50,000 or 5% of your gross receipts (whichever is less).
After three consecutive years of failing to file your 990, your organization will lose its tax-exempt status.

Luckily, you can avoid all of these potential challenges by simply filing your 990 before your deadline. Just figure out your due date, get started well in advance, and be sure you have a reminder set every year!

3. Make sure your document is complete.

Another thing you’ll want to check before sending your tax form (whether physically or digitally) is that you’ve completed everything you need to on the document. If you’re missing vital information on your first submission, you can be penalized as if you hadn’t completed the form in the first place.

To ensure your organization remains tax-exempt, be sure to double-check your submission before sending it in the IRS. According to the IRS website, “The date we receive a complete and accurate return is the date we consider your return filed.”

4. Leverage low-cost filing software.

One significant trend we’re seeing more of in the nonprofit space is organizations using online filing software rather than investing in a dedicated accountant. Especially for smaller organizations (with gross receipts under $200,000 per year and are eligible for the 990N or 990EZ), filing your annual tax return with the help of a dedicated e-filer is completely attainable.

Plus, the right software provider can help make sure you follow the first three tips as well. By ensuring you fill out your form completely before submitting it, offering guidance on selecting the form your organization needs, and sending automated reminders as your deadline approaches each year, a nonprofit tax filing software can help save your organization time and money that can be reinvested in your cause. Not to mention, your e-filer can even save relevant information year over year, making the re-filing process simpler than ever.

All in all, filing Form 990 is one of the most important things you can do as a nonprofit each year—both for IRS requirements and for ensuring complete transparency with your donors.

Mathew’s expertise is in sales forecasting, goal setting, client growth initiatives and business development and analytics. When he is not laser focused on moving organizations forward, you can find him spending time with his wife, Lauren, and two dogs, Reagan and Teddy, running marathons and watching the Atlanta Braves and Auburn sports.

Fundraising Tuesday: How Silent Auctions Get The Word Out for Your Nonprofit

June 22, 2021 by Dennis Fischman Leave a Comment

A guest post by Jeff Porter of Handbid

Nonprofit trends have changed dramatically in recent years. A few event types consistently prove to be successful for earning donations and long-term support. Silent auctions are particularly effective for getting the word out about your cause to your audience. This includes your current supporters, new donors, and potential business partners.

Silent auctions have several moving parts, making them more complicated than other fundraisers. With the right auction software, auctions can reach supporters in ways other fundraisers often struggle to do. After all, few other fundraisers offer donors something in exchange for their contributions.

To show how effective auctions are, this article will cover three ways they can help your nonprofit:

Engage donors in a memorable event.
Attract new audiences.
Create connections with local businesses.

Engage donors in a memorable event.

Browsing auction items, bidding, and winning a prize is outright fun for your donors. At the end of the night, many of your guests will go home with a physical reminder of your event. Supporters who talk about their prizes with their friends and family will likely mention where they won them.

Handbid’s silent auction guide recommends procuring prizes that are experiences. This could include classes, vacations, or small day-out prizes like a massage or spa trip. While these prizes aren’t physical reminders, supporters will need to redeem them later. This means the auction they won them from will stay on their minds.

The only catch for creating a memorable experience is intertwining your nonprofit with your auction event. Some supporters may share with friends and family that they had a good time. Unfortunately, they might not remember what cause their bids supported. You can get ahead of this problem by educating supporters on your mission through your outreach and the event itself. This applies to announcements, printed handouts, and thank you emails.

Attract new audiences.

Silent auctions give supporters a new reason to donate. Unique auction items might attract supporters who hadn’t considered giving to your cause. Silent auctions are also super flexible in how they can be run. Their format allows for in-person, online, and hybrid events, which all can attract new supporters:

In-person auctions appeal to local community members who live close enough to attend. At in-person auctions, you can solidify your connections with long-term local supporters. Don’t forget to also welcome new supporters who have recently moved to your community.

Online auctions allow your nonprofit to connect with supporters all across the country. Virtual events have risen in popularity because of their global reach and lack of venue and catering costs. Online auctions can last for several days, so more supporters can discover your auction and cast a bid.

Hybrid auctions engage your local supporters, your remote supporters, and anyone who prefers to attend from home. These events allow supporters to decide how they engage, letting them choose how and when they interact with your nonprofit.

Auctions can help your nonprofit excite both new and current donors by marketing high-value and unique items. The chance of winning something can be as much of a reason to attend as the opportunity to support your cause.

Create connections with local businesses.

Your nonprofit will need to get auction items from somewhere. This makes auctions a great opportunity to reach out to local businesses. Bear in mind that not every connection will lead to a corporate sponsorship. 360MatchPro’s guide to corporate philanthropy points out that many businesses support charitable causes to improve their image and attract new customers. In other words, they have good reason to support your nonprofit—you’ll just need to do a little work to point it out to them.

Contacting businesses is a multi-step process. Not to mention, acquiring a full item catalogue can take months. Here is a breakdown of how your procurement team can start reaching out to businesses:

Create a list of potential business sponsors. Your team will need to research local businesses that cater to your audience. Then, create a list of potential partners. Likely candidates are businesses that have supported similar events, are doing well financially, or offer a product or service related to your nonprofit or event. Ideal partners will fit all three of these criteria.

Reach out to middle and low-priority businesses. With practice, your team will get better at appealing to businesses. Start with lower priority business partners. Your team can refine their approach without the stress of talking to one of your dream partners.

Follow up and thank businesses. After your event, follow up with a sincere thank you. Mailing thank you cards shows your nonprofit’s dedication to your professional relationships. Calling them on the phone after your event to thank them can open the door for future collaborations.

Remember that some businesses will prefer to support your event in different ways. Some might donate items or offer them at reduced prices, while others prefer to make a cash donation. No matter how they give, be sure to tell them thank you.

Jeff Porter, Founder & CEO of Handbid, has spent 18 years in the non-profit industry. In 2004 he founded the Prader-Willi Syndrome Association of Colorado where he still resides as board chair.

Jeff learned early on that non-profits desperately needed better and more affordable fundraising solutions. Leveraging his software background, he built most of the tools his charities used, and in 2011 he launched Handbid at his own fundraising event. The goal was to improve the guest experience, reduce administration and increase revenue. Handbid accomplished all of those goals, effectively doubling revenue in its debut. Nine years later, Handbid’s suite of tools has delighted over a half-million guests, generated millions of bids, and helped thousands of charities raise well over $100 million.

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TY Thursday: 3 Annual Reports that Thank Donors

Why Annual Reports Matter