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Helping you win loyal friends through your communications

Are You a Fundraising Outlaw?

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Registering your nonprofit for fundraising sends a positive message to your donors. Guest post by James Gilmeroutlaw

A huge percentage of charities in the United States are raising money unlawfully, and don’t even know it.

Both new nonprofit founders and executives mistakenly believe that recognition as a 501(c)(3)–that is, being exempt from federal income tax–is a “golden ticket” to limitless fundraising. The reality is, forty-one states have an additional registration requirement, which if you ignore, can get your organization in some hot water.

This post is a basic introduction to the subject of charitable solicitation (aka fundraising) compliance. The purpose of the article is to get you thinking about your organization’s credibility, how to avoid penalties, and even impress your donors!

Registering with the State

“Fundraising registration” occurs at the state level, where you file information about your organization’s leadership, financials, and programs with the Attorney General or Secretary of State.

“Compliance” refers to managing  registration requirements in each state where you solicit, renewing your annual registration on time, and keeping up with additional corporate filing and registered agent requirements.

Why Comply?

There is a cost to fundraising registration, both in government fees and time, but those costs are easily outweighed by state and federal penalties. We’ve seen fines of over $5,000 for a single infraction in one state. How would a hit like that affect your organization?

Besides fines for failure to register or renew, states can revoke your organization’s state tax exemption, hold officers and directors personally liable for payment, and deny your right to solicit in that state altogether.

At the federal level, you disclose where your organization solicits funds directly to the IRS on your Form 990 tax return. Let’s face it: lying to the IRS isn’t a good idea either!

Fundraising Compliance: What You Gain

The purpose of all this work for you is a good one: to protect citizens of that state from unregulated or illegitimate charities.

Just as you do research on prospective donors before you ask them to give, experienced donors use state databases to look up your nonprofit before they make a contribution, especially if they’ve never heard of you. Many foundations and grantmakers consider state registration an important prerequisite to any funding. Being registered with the state helps reassure donors that they are making a good investment in your organization.

By investing in compliance, you demonstrate your credibility and commitment to the community you serve. To learn more about specific fundraising registration requirements in your state, visit this Fundraising Compliance Guide.

Happy fundraising!

 

Author Bio: James Gilmer is a compliance specialist for Harbor Compliance, which establishes 501(c) nonprofits and helps them stay compliant. Harbor Compliance assists charities in every state and several countries abroad. James serves on the Board for two nonprofits in Lancaster, Pennsylvania.

The One Way to Get Donors to Give Again and Again

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59% of donors don't repeatDoes your nonprofit live and die by donations? Chances are you’re dying.

You work so hard to get a donation, especially at the end of the year. By next year, however, more than half those donors–59%–will disappear. You will never hear from them again.

It’s even worse with new donors. Three-quarters of them never repeat.

This is a race nonprofits can’t win.  That’s why your nonprofit will die, maybe even in 2015…unless you find a way to make donors want to give to you again and again.

Fortunately, there is a way.

Giving donors the stories they want to hear can mean life or death for your organization. Share on X

How can you increase the chance that a person who gave once will give again?

People give their first gift to your organization for a variety of quirky reasons. When they  continue to give, it’s for one reason: because they have come to know, like, and trust you.

People give when you build a relationship with them, and the key to that relationship is great communication.

Great communication begins with the thank-you letter, but it doesn’t end there. A newsletter is a good thing, too, but a newsletter full of what’s happening inside your organization will do nothing to keep your donors.

So what kind of communication does work? A June 2014 survey by nonprofit technology research firm Software Advice found that sixty percent of donors want impact stories to see how their first donation is making a difference.”You must find, recognize, collect, and share those stories in all your communications.

Become a storytelling nonprofit

It takes a team of people to collect and tell your stories.

  1. People with day-to-day experience. They could be your direct service staff or volunteers, your Board members, your customers or clients. Develop them as sources, so they look out for stories you can tell.
  2. Writers. Someone who can take other people’s words and make them sing in print is essential to your team.
  3. Photographers/videographers. A picture may not be worth a thousand words. It may, however, make all the words you write more meaningful and memorable.
  4. Artists. Sometimes a good graphic is more powerful than a photo (and often, easier to produce when you need it).
  5. Tech people. Because your newsletter, blog, email, Facebook post, or video is no good if nobody sees it! Someone has to keep the system up and running and figure out the glitches as they occur.
  6. Editor. You need a consistent tone to your communications, and they must appear regularly so your audience expects them. Put one person in charge.

Get expert help

Most of all, what you need is someone who will look at your organization with the eyes of a donor. It’s all too easy to fall back into “We held this event” or “We hired this new person”–but that’s not what your donors want!

A communications consultant can help you recognize and shape the stories your donors want to hear. There are ways your organization can afford a consultant, even if you don’t have one in the budget yet. And the investment is worth it.

Your donors are waiting to hear what difference their donations are making. They won’t wait forever. Get the help you need to make sure they give again and again.

 

 

 

Do Your Donors Want Poetry or Prose?

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How should you raise money for your cause? Write grant proposals, send out appeal letters, hold events, use crowdfunding?

It depends whether your donors want poetry or prose.

My Book of Days cover

Raising funds with words that sing

My late brother Ron Fischman needed money. He had commissioned artist Debora Alanna to produce the beautiful cover illustration for his new volume of poems, My Book of Days–and he had to pay her for her work.

Ron set up a crowdfunding campaign on Pubslush. He went on to do all the things that would draw people in and make them feel they were doing something good.

  • He showed people the art they’d be supporting
  • He gave them several tastes of what the book was all about.
  • He made it personal. Debora “prepared [this cover art] out of faith that my friends, colleagues, Jewish and poetic worlds would make this campaign successful.”

Ron also offered premiums that would appeal to exactly the kind of person who would support his book.

And it worked! The crowdfunding campaign raised enough money to pay the artist, send out the premiums, and do a tiny bit of additional promotion besides.  (By the way, you can order a copy of Ron’s book if you wish. Just click this link.

Raising funds with ideas that matter

Ron needed less than a thousand dollars to make his dream come true, and he had something tangible to show as a result. His cause was made for crowdfunding.

Others, not so much.

My friend and colleague Robin Carton of Kayak Consulting Group was trying to raise money for a group that makes small, progressive organizations all over the Boston area smarter and stronger.

Her client wanted to send a direct mail fundraising appeal to the people who support those organizations.  The catch? They had no money for direct mail in their budget.

Can you imagine going public with the plea “Give us money so we can send out letters to raise more money?”  No, I can’t either!

Robin and I agreed that her client’s best bet was to submit grant proposals to foundations and businesses. Foundations have concepts for what her client does: “capacity building,” and “combined impact.”  Businesses understand “marketing’ and “return on investment.”

The language may not sing, but it may convince. And if they’re successful, Robin and her client will attract a lot more than a thousand dollars.

When you think about how to raise money for your cause, consider it a communications question.  Do the people you want to support you think in poetry or prose?

 

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