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Dear Kim,
I have been making plans for a nonprofit organization now for about two years. I have my EIN # and I know what the guidelines entail for starting the organization. The only thing that is missing is my 501(c)(3) status. The problem: I do not have the funding in order to apply for the exemption,
which is $500. Is it possible to receive funding in order to apply for the tax-exempt status?
Almost but Not Quite
Dear Al,
It may be possible to receive funding in order to complete your filing, although I have never heard of anyone doing that. What you should be able to do, especially after working for two years on this organization, is raise the $500 from all the other people who agree with you about starting
this group. You should put in $50 yourself, then call 20 people and ask them to join you. Upwards of half of them won't be able to give anything, and some may not be able to give $50, but it should not take long to round up the money.
Remember that your tax exemption is that—once you have this status, your organization is exempt from most taxes. As such, the IRS wants to determine that your organization is, in fact, a PUBLIC charity—that is, that some cross section of the public will support you. Raising this
$500 will give you some donors to go back to once you have your tax exemption and will reassure you that you are not alone in your endeavor.
Dear Kim,
It seems that whenever the economy experiences a downturn, animal welfare organizations are the first to suffer. It is understandable that limited resources are disbursed to aid children, the elderly, and other people-oriented philanthropies. However, the often untold story is that as
individuals are forced to stretch their paychecks, their pets are often discarded or dumped at local shelters. There is an integral family component in helping at-risk families retain a beloved pet by offering low-cost veterinary care, spay/ neuter and rabies programs, and other valuable
services.
Can you advise us on a way to "package" our animal support and rescue programs in the broader context of helping people and where best to seek such funding?
Meowing for Dollars
Dear Dollars,
Let me first respond to your first sentence, and then to the rest of your question. Almost every client I work with thinks that their issue is the first to suffer when the economy goes sour. People working on national issues think local issues are easier to raise money for. Arts and culture
groups always wish they were animal welfare because "no one is going to let the animals suffer." You, in turn, think that being a child welfare group is easier. What you need to understand is that this is a hard time to raise money for almost every cause.
That said, your instinct to "package" what you do in terms of families is a good one. There is a lot of evidence that pets are stress reducers, that they lower blood pressure, that their reassuring unconditional love is just what children and adults alike need at the end of a day.
Conversely, in homes where there is domestic violence, if there is a pet, the animal will probably have suffered as well. From the way your letter is phrased, you are already doing a good job of making these connections.
As for who will fund this broader context, I am afraid it will mostly be the donors you have now, their friends, and colleagues. However, some funders may be interested in collaborative programs where animal shelters, domestic violence programs, and child welfare groups get together and work
jointly toward a common goal of ending violence toward any living thing. These times call for a lot of creativity, and I think you have it.
Good luck in your important work.
Dear Kim,
Is there a rule of thumb to use in setting a budget for a fundraising and development department? Should an "efficient" department be expected to raise 10 times cost, or 5 times cost, or 50 times cost? Are there industry benchmarks for performance?
Seeking a Sign
Dear Seeking,
No, there are no rules and if there were, they would be bogus. So much depends on how old the organization is, how difficult the issue is to raise money for, how much fundraising the organization has done in the past, how much money is needed, how fast it must be raised, and other variables.
For example, the Sierra Club in San Francisco would have an easier time raising money than a new GLBT education project in rural Kansas. However, a GLBT project in San Francisco might have an easier time raising money than a new chapter of the Sierra Club in eastern Texas. A 20-year old social
service agency which, up to now, has been supported primarily on government contracts, will have to re-tool itself to raise money privately when their support is cut. Their expertise in getting government grants will not help them in the world of individuals, foundations, and corporations.
I don't know the genesis of your question, but many times when I am asked this type of question it is because the board or the Executive Director wants to know how to evaluate the development function in the organization. This is a legitimate desire, but the development department's success
depends on the board and Executive Director being involved in fundraising.
Here are some questions that get at the success of development:
- Does the organization have 100 percent giving from the board?
- Does each board member give an amount that represents one of their biggest gifts to any organization?
- Does each board member participate in fundraising?
- Do the development director and board chair work together to make sure that each board member is getting the support he or she needs to engage in some aspect of fundraising?
- Is there a fundraising plan that everyone is aware of and following?
- Does the organization have a number of income streams, so that no one person or place is more than 20 percent of the whole?
- Does the organization have an ongoing program to attract, retain, and upgrade donors?
- Does the organization use strategies properly?
- Is fundraising integrated with program? Are program people involved in fundraising and vice-versa? Does every department understand and support the others?
- Do the same number of people, working the same number of hours, raise more money every year?
In a nutshell, fundraising must be evaluated strategy by strategy, and then as a part of the whole organization.
Kim
If you have a question you would like Kim to answer please email reading@idealist.org with the subject line "Dear Kim". Please note: Due to the large volume of email received, Kim will not be able to answer all the questions asked or respond
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