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How To Get Funding For Your Nonprofit (Part II)

In last week’s blog post, we looked at a set of core principles that are critical for nonprofit organizations needing to raise financial support. If you haven’t read it yet, check that one out before diving into this one. It will make the ideas discussed below more effective.

So, what are some funding strategies that work? Let’s explore four categories of fundraising: direct appeal/pledging, professional programs, self-directed programs and grant funding.

Direct appeal/pledging. With this type of fundraising, you are literally asking people to give money to your organization, either through an individual gift or a pledge. This is the simplest and most direct method of funding your nonprofit and it should be a component of most funding plans. To be effective, however, you must be able to clearly articulate your program’s purpose and why someone should support it. This requires your program to be a more attractive target for someone’s giving than some other cause. I would again recommend you read last week’s blog article for a refresher on getting your pre-funding ducks in a row. After convincing someone to donate, you must maintain a consistent stream of communication with your donors, keeping your program before them on a regular basis if you want them to continue supporting you. That can be done through a variety of creative methods, one of the best being monthly newsletters. Technology has made this so much easier and cheaper, too. Instead of the hassle of dealing with printed material and postage costs, you may wish to consider a number of online communication tools that allow you to send newsletters, promos, etc. via email. We like Constant Contact for this purpose. You can also check out Aweber and some others. All are similar in features and price. They all come with pre-designed templates that make it simple to create good looking communications. Another often-overlooked tactic is to send a receipt/thank you letter for every donation, not just at the end of the year. Just remember that donor cultivation is a never-ending process. As soon as you start letting that slide, you’ll see your support slide right with it.

How To Get Funding For Your Nonprofit

It is the burning question of every nonprofit organization: "How do we get funding?" With the economy in the dumps, and recovery looking like a distant hope, this question screams for an answer. In fact, we get more requests from…

New Form 990 Problems Are Everywhere

March 2, 2009
Greg McRay, EA
Commentary

If there is one constant in life, it’s change. And most people don’t do “change” very well…even the IRS! The new 2008 Form 990 is a complete, top-to-bottom overhaul of the form (as we’ve discussed in previous posts). As we talk with more and more clients/prospects, we’re really starting to see some trends develop…most of them not good.

Five Considerations When Starting A Nonprofit in a Tough Economy

February 18, 2009
Greg McRay, EA
Hot Topics

In this tough economy, nonprofit organizations are needed more now than ever. More and more people are finding themselves in difficult circumstances and, according to all available evidence, it's going to get worse before it gets better. Despite all the…

An Obituary for National Heritage Foundation?

February 3, 2009
Greg McRay, EA
Commentary

On January 24, 2009, National Heritage Foundation filed for Chapter 11 bankruptcy protection in federal court. Is this the end for NHF?

Read the Forbes story here

National Heritage Foundation, NHF, was founded by J. T. “Dock” Houk as a 501(c)(3) fiscal agency for nonprofits using a donor-advised funds scheme. NHF operated under the premise that people shouldn’t have to be burdened by the regulatory compliance headache of running their own 501(c)(3) in order to do good and charitable things. One could just start an NHF “foundation” and have donors give directly to NHF, but designate the funds to their “foundation”. “Foundation” is in quotes because that is NHF’s terminology. NHF “foundations” are not considered true foundations. The idea was that by signing up with NHF, people could have what looks like a charity, but piggy-back on NHF’s tax-exemption. In theory, the “foundations” were an extension of NHF’s charitable mission. In return for its efforts, NHF took a small percentage of the donations for operating expenses.

Read New York Times article on NHF from 2000

Like so many theories, NHF’s didn’t work so well in practice. Early on, NHF aggressively promoted the idea that “foundation” directors should pay themselves well, even if they were the primary donor. In other words, you could start a “foundation” to do whatever, donate to your own “foundation” tax-deductibly through NFH, then pay yourself for your good deeds. Needless to say, this generated enormous controversy within charitable circles and drew the ire of the IRS and Congress. But technically, there was no law directly prohibiting such since these “foundations” were part of NHF and, in theory, NHF controlled the expenditure of funds.

Starting a Nonprofit in a Bad Economy

January 25, 2009
Greg McRay, EA
Hot Topics

Sounds like scary stuff, doesn’t it? The decision to start a nonprofit organization is difficult in the best of circumstances. But in a downright frightening economic climate, does it make any sense at all? Some experts are predicting that this economy may doom up to 100,000 existing charities this year. Could you possibly pick a worse time?

Radical Changes to Form 990

January 14, 2009
Greg McRay, EA
Hot Topics

For the first time since 1979, the IRS has completely overhauled the Form 990 – Return of Organization Exempt From Income Tax. And boy, is it a doozy! This time, they weren’t fooling around.

“So what’s new?,” you ask. Literally everything…from the filing requirement thresholds to the information they are seeking…it’s all different.

US Bans Thrift Stores (updated)

January 8, 2009
Greg McRay, EA
Commentary

Got your attention? Good…because what we’ve got to report on will shock you…and could have a devastating impact on some charities and the families that depend on them.

Congress, in a stroke of genius that was too smart by half, passed the Consumer Product Safety Improvement Act in August 2008. It takes affect February 10, 2009. The public is only now becoming aware of the draconian nature of the statute.

Answers to Reader Questions (Dec ’08)

At the end of most newsletters, we put out the call for “topic requests”. We wanted to get to some reader questions before the year ended. We will try to answer questions like these, that don’t require a whole article, from time to time. If you have article topics that you would like us to cover, email them to us at mail@foundationgroup.com or simply reply to the email newsletter when you receive it. We cannot guarantee your question will be chosen, but we’ll try. On to the questions…

Q) Do all donations need to be spent by year’s end?

A) The quick answer is, no. “Nonprofit” does not mean that at the end of the year there should be no money left in the account. A 501(c)(3) organization can have money left at the end of the year. It would probably be a good idea if it can. Money left over can go toward adding programs, improving existing programs, make up for less funding next year, etc. Never forget that you’re still running a business (of sorts)…you gotta make more than you spend!