Fundraising
VIII. A. Principle–Funding Essentials
No funding, no program. Funding is central to achieving the mission successfully.
Practices
- The board and staff are responsible for securing the funding needed to carry out the organization’s programs.
- A strategic plan must include a specific financial plan as to sources of funding, individuals designated to secure funding, timetable for funding, and review of funding status at every regular meeting of the board.
- Diversity in funding sources increases organizational financial stability. Most charitable organizations derive their funding from a combination of sources including private contributions, earned income and government.
Fundraising Fundamentals (2002), by James M. Greenfield.
Frequently Asked Questions about Fundraising
Iowa Code §13C.2 requires that professional fundraisers register with the attorney general. Iowa Code §13C.2(1)(a). The Iowa Code also requires that professional fundraisers disclose contributions received and payments made to the client charities. This disclosure can be done at the time of registration with the Iowa Attorney General's office or by filing a statement agreeing to provide disclosure information to a government entity or a person within one day of a request. Iowa Code §13C.2(1)(b),(c). Additionally, charitable organizations are required to provide financial disclosure information to requesting parties within five days of a request. Iowa Code §13C.2(2). If either the professional fundraiser or the charitable organization fails to provide financial disclosure information when requested, the attorney general may seek an injunction prohibiting further fundraising until such disclosure information is provided. Iowa Code §13C.3(b). See this article on in-state fundraising for a more complete answer.
Several professional associations for fundraisers have drafted various versions of a Donors Bill of Rights. Additionally, the Iowa Attorney General’s Office, in conjunction with representatives of the Central Iowa Chapter of the National Society of Fundraising Executives, has created a web page with information on charitable donations and how to give donations wisely. This information helps potential donors make intelligent decisions on how to give to legitimate organizations. Central to the various versions of a Donors Bill of Rights is a donor’s right to be informed. This right is also reflected in federal tax law. The Internal Revenue Service requires that organizations qualifying under 501(c)(3) and 501(c)(4) send copies of their three most recent Forms 990 (as well as Form 1023, the form to apply for tax-exempt status) to anyone upon request. Organizations that do not comply are subject to fines.
For the most part, many states have not developed clear Internet fundraising registration requirements. However, some states are in the process of assessing their Internet fundraising policies, so nonprofits need to keep abreast of potential changes. As a safe practice, nonprofits may want to review the Charleston Principles, suggested Internet fundraising guidelines released by the National Association of State Charity Officials (NASCO). The guidelines are non-binding and were designed to assist states in developing their own regulatory schemes. The Principles suggest that nonprofits domiciled within a state register within that state. It is also suggested that organizations outside of a particular state should register with that state if they target residents of that state, or if they receive funds from residents of that state on an “ongoing” or “substantial” basis. The Principles leave definitions of these terms up to the states.
According to law a pledge may be a binding contract. Courts will usually enforce pledges if the organization can show that it substantially and reasonably relied on the pledge. However regardless of whether or not a nonprofit is legally entitled to pledged money the more important issue is how to determine when it is appropriate for a nonprofit to sue to recover a pledge. Such determinations can only be made on a case-by-case basis. Relevant considerations are the overall impact of the gift on the organization, the likelihood that the donor will make future gifts, the opinion of the board of directors, and community perception.