FUNDRAISING EVENT GUIDE

A fundraising event is an opportunity to achieve a set of specific goals for a nonprofit organization. It is important for organizations to plan events as a part of a broader strategy as well as to set event-specific goals and implement a plan to achieve those.

Set Goals

After a review of the organization’s annual budget and funding needs, as well as assessing readiness including staffing time and resources, the first step to a successful fundraising event is to set qualitative and quantitative goals. Examples of event goals might be:

  • The dollar amount that the organization would like to raise at the event (and as a % of your annual fundraising)

  • How the event can be leveraged to raise awareness about the nonprofit's cause

  • How to use the event to recruit new donors and volunteers as well as increase individual commitment

  • Additional goals of the event (celebrate your launch, honor a specific donor, etc.)

  • Is this event the first in a series, a first annual event or a stand-alone opportunity?

Strategize

Determine event audience based on the goals: Depending on what an organization wants to achieve through an event, it's important to establish a target audience. For example, is it an event for large donors (four or five figure gifts) in order to raise 100% of the annual costs or is this an opportunity to engage the community to learn about the organization through a small annual contribution?

Choose an event type that suits the target audience: Depending on the desired audience, be sure to choose an event type that is fitting for that crowd. In addition, remember that a large event is not always the one to do first. Sometimes doing a few smaller events to solidify a community of supporters can be beneficial leading up to a larger gala.

Sample event types include:

  • Formal galas, dinners, speaker series, run walks, conferences, etc.

Choose an event date:

Give the organization and attendees enough time to plan and execute the event
Consider the day of week and the time to schedule the event. For example, Mondays and right after work hours can be tricky for attendees. However, venues are typically more expensive on weekends. 

Work out an event budget:

It’s important to assess the event cost before determining ticket prices and sponsorship levels. Consider these items against the established budget:

 Venue

  • Decorations

  • Food

  • Refreshments, including whether alcohol will be served and how that will be managed

  • Printing, mailing and postage

  • Travel expenses

  • Event programs

  • Equipment

  • Entertainment

  • Advertising

  • Speakers

  • Giveaways

Also, think about what you may be able to get donated! Restaurants and venues may provide discounts or in-kind donations.

Promoting the event and finding attendees:

  • Engage existing donors and volunteers to commit to selling a certain number of tickets or promoting the event through their channels

  • Post the event to the organization's website and make it easy to purchase a ticket

  • Share the event on social media

  • Consider honoring a specific donor or group of donors as they’ll likely bring their colleagues and friends to share in their evening

Don’t forget about the little things. Some small things that are common to forget include:

  • Event safety measures

  • Access for individuals with disabilities

  • Insurance

  • Photography

  • First-aid

  • Parking or other venue directions

  • Having petty cash on hand for unexpected expenses like running out of ice or tipping

  • Nametags

Execute

Day-Of Plan & Execution

It's essential to create a detailed itinerary for your event including everyone’s roles as volunteers, staff etc. Have volunteers assigned to tasks and provide directions ahead of time. Having a plan scheduled down to the minute will ensure everything runs smoothly, and that guests are entertained the whole time.  

Fundraise

This is a fundraising event which means including a pro-active ask and relationship building with donors at the event. The work is not just about putting the event together or selling tickets. The more an organization can highlight their work and build personal relationships with supporters the more successful it will be. Key hints:

  • Assign staff, volunteers or ambassadors to thank and greet specific donors

  • Include signs, reminders, slides and announcements making the request for support and giving clear directions on how to donate now

  • Keep a running tally where guests can see how much has been raised during the event perhaps on a screen or through announcements

  • Make a clear case for specific programs or initiative support. For example,  “We are fundraising tonight to launch our new after-school program”

  • Thank current donors publicly in printed materials & announcements so that appreciation is a part of the event

Thank You & Final Call to Action: The night of or the morning after your event send a thank you email to all attendees. This email should include a thank you for attending, as well as a final call to action, giving people who felt inspired by the event one last chance to donate. Tell them how their funds have had or will have an impact. Remember to thank donors three time for each gift!

Personal Follow-Up: Have someone from the organization call, email or send a thank-you card to any key donors that attended. For prospective donors, schedule a meeting, call or tour of your next program so they can learn more about the mission. The event is ALSO is about identifying and cultivating new donors and partnerships to lead to future giving. This is proactive and requires which requires adequate follow up towards continued donor and partner relationships.

Evaluate and plan for the future

Evaluate

Taking a moment to assess this fundraising event is the first step in planning the next one. Run through each of the goals and determine what went well, what didn’t go well, and what could be done differently next time. Include staff, volunteers and participants in the debrief as everyone’s feedback is important to improving on future events.

Lastly, relate results back to the overarching event strategy (how all fundraising events and efforts come together to meet the established budgetary needs) as well as the fundraising goals for the fiscal year. No fundraising event stands alone - it’s a part of the overall approach to delivering the funds needed to have a lasting impact on delivery of mission.

FAIR MARKET VALUE

Running a successful - and compliant - nonprofit organization demands a sound understanding of the concept of fair market value (FMV). The need to account for fair market value spans many aspects of nonprofit operations, such as accepting donations and issuing tax receipts, as well as ensuring that incurred expenses do not infringe upon private benefit and private inurement rules.

What is fair market value?

As defined by the IRS, FMV is “the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.”

As related to nonprofit organizations, FMV simply ensures two things:

(1) that individuals and entities who contribute to a nonprofit organization receive a fair tax deduction
(2) that nonprofits (who have been granted the privilege of tax-exemption) spend their funds appropriately

How is the fair market value of something determined?

By and large, the FMV of any contribution is based on its selling price - value at the time of contribution. The original purchase price or cost of production does not affect the FMV of an item today.

More specifically, the following factors are considered in the determination of fair market value:

  • The cost or selling price of the item

  • Sales of comparable properties

  • Replacement cost

  • Opinions of experts

For specifics on how each of these factors can be employed, check out the IRS website here: https://www.irs.gov/publications/p561.  

When does FMV come into play?

When a nonprofit pays for goods, services, or employees

Determining FMV is rather simple for most goods and services purchased under normal circumstances. For example, a nonprofit purchasing milk can easily check with a local grocery store to determine that the price they are paying is the fair market value — what the market is willing to pay.

Or, take the example of paying an employee. Determining the FMV of someone’s labor (and thus ensuring your compensation is at or below FMV) is rather concrete — easily justified by their education level, skill set, location, and job responsibilities.

Corporate sponsorships
Say a nonprofit secured a $20,000 title sponsor for an event. That’s amazing! But how much of that contribution is actually tax-deductible? To determine the answer to this question, the nonprofit would need to understand fair market value. In the case of corporate sponsorships, unlike typical charitable contributions, benefits are often received in exchange for a donation. For example, the business may get tickets, signage, a booth where it can inform others about its products or services, an advertisement in a program or online recognition for their contribution. The fair market value of these benefits must be quantified and subtracted from the contribution amount in order to determine the amount of  the donation that is actually tax-deductible.
Selling tickets for a fundraising event
Event tickets work pretty similarly to corporate sponsorships. When a nonprofit hosts a fundraising event, attendees may receive benefits while attending. For example, say a ticket to a fundraiser costs $300 but the attendee is served a formal dinner that costs $60.00. To determine the total amount of the ticket that is tax-deductible (truly a gift), the nonprofit must subtract the FMV of the dinner ($60) from the ticket price ($300). As a result, $240 of the $300 contribution would be considered tax-deductible.
An individual or company makes a noncash contribution to your nonprofit
Nonprofits often receive noncash charitable contributions. In these instances, determining the fair market value of the donation that is a physical asset is much more challenging than when cash is contributed. This is because in-kind donations often arrive in a variety of states and forms — having experienced appreciation, depreciation or changes in the market since the time of original purchase.

Check out the following examples for some clarification:

Computer donation
An individual purchases a computer for $900. A few years later, the computer still works but the owner wants a new one, so they donate the old one to a local nonprofit. What is the fair market value of that computer at the time of contribution? Certainly not the $900 that they purchased it for years ago since it's used and an older model. Rather, the FMV of this item would be what the computer would sell for on the market today.  
Piece of artwork
An individual owns an Andy Warhol painting that their grandfather purchased for a few hundred dollars before Warhol was a famous artist.  Now the painting is appraised at $10 million dollars. When the individual decides to donate the painting to LACMA, what is the fair market value? $10 million dollars.  


Additional resources and specifics related to FMV are provided by the IRS here: https://www.irs.gov/publications/p561

NONPROFIT LOBBYING

Lobbying is a form of advocacy that specifically attempts to target or influence a piece of legislation. Nonprofits are allowed to lobby, however the IRS strictly regulates the amount and type of lobbying that nonprofits are allowed to participate in. Limiting the amount of time and money 501(c)(3)s spend on lobbying ensures that a nonprofit remains focused on the delivery of its charitable mission.

In both advocacy and lobbying efforts, 501(c)(3) public charities cannot engage in political activities, including efforts to influence elections or secure or oppose office for political candidates.

What are the different types of lobbying?

Lobbying activities are grouped into two main categories: direct lobbying and grassroots lobbying.

Direct lobbying attempts to influence legislation by communicating with a member or employee of a legislative body, or with a government official who participates in forming legislation.

Grassroots lobbying aims to influence legislation by trying to change the public’s opinion and encourage people to take action with respect to a piece of legislation.

What are the rules for nonprofits?

Since the IRS regulates lobbying to ensure that organizations are focused on the delivery of a charitable mission rather than on politics, the IRS policy is that “no organization may qualify for section 501(c)(3) status if a substantial part of its activities is attempting to influence legislation.”

How does the IRS determine what constitutes a substantial part? They consider “all the pertinent facts and circumstances in each case,” specifically including the amount of time employees and volunteers devoted to lobbying and the total dollar expenditures devoted to lobbying in comparison to the charity’s overall budget.

As it can be difficult to determine what is “substantial,” the IRS gives nonprofits the option of opting into the Expenditure Test by filing a 501(h) election. What’s the difference between the Substantial Part Test and the Expenditure Test? The Expenditure Test outlines the exact amount of money that can be spent on lobbying efforts in relation to the amount your organization spends on the delivery of your charitable purpose.

Here is the Expenditure Test breakdown provided by the IRS:

expenditure-test.png

The Takeaway

Nonprofits are allowed to lobby in attempt to influence legislation that is relevant to their charitable purpose or that impacts their service recipients. That being said, 501(c)(3)s must also ensure that lobbying is only one of many ways that their organization delivers upon their charitable mission.

Some lobbying examples explained:

A nonprofit employee is invited by a staff member from a political office to attend a committee meeting and testify or explain issues around their subject of expertise.

NOT LOBBYING - When invited to a committee meeting to share expertise in their field, the time and efforts spent are not considered lobbying on the behalf of a nonprofit organization.

A nonprofit goes to a regulator’s office in attempt to influence a regulation being written.

NOT LOBBYING - Since this effort involved a regulation rather than legislation, it is not considered a lobbying activity.

A nonprofit goes to an elected official’s office in order to support or oppose a piece of legislation.

LOBBYING - Since this effort is a direct attempt to influence a piece of legislation by meeting with an elected official, it is a clear example of lobbying.

A nonprofit urges its followers on social media to contact an elected official in order to support or oppose a piece of legislation.

LOBBYING - Even though the organization is not directly contacting a governing body, calling upon the public to do so constitutes grassroots lobbying.

A nonprofit writes an email or makes a phone call to an elected official regarding a piece of legislation.

LOBBYING - Any contact — oral, written, or electronic — with an elected official is considered a direct lobbying effort.

Employees of a nonprofit spend their lunch hours signing petitions related to a piece of legislation on their work computers.

LOBBYING - Even though the employees are signing petitions on their off time, using charitable assets (the computers) to do so makes these lobbying efforts on the part of the nonprofit organization.

PRIVATE BENEFIT & PRIVATE INUREMENT

Private Inurement and Private Benefit rules exist to ensure that any and all section 501(c)(3) organizations operating in the United States are truly worthy of the tax exemption that their status affords them. In order to be eligible for tax exempt status under section 501(c)(3) of the Tax Code, organizations must demonstrate that they exclusively “serve a public rather than private interest.” No organization whose donations or assets are directly or indirectly used to benefit an individual or for-profit entity is eligible for section 501(c)(3) tax exempt status.

What is the difference between Private Inurement and Private Benefit?

The main difference between the two is the distinction of who is benefitting from the tax exempt status of a section 501(c)(3) organization.

Private Inurement

The insider rule. It is illegal for a tax “exempt organization’s income or assets” to disproportionately benefit an individual or for-profit entity that has “significant influence over the organization” or is otherwise “closely related” to it. No party who has any control over the organization, or those closely related to them, may monetarily benefit from operations or transactions with the exempt organization. If an organization violates the private inurement rule, there is no leeway: its tax-exempt status under section 501(c)(3) will be revoked.

Private Benefit

This rule relates to benefits granted to private parties, meaning individuals and entities that do not fall within the organization’s charitable class(es) and do not have “significant influence over” or are not “closely related” to the exempt organization in question. The private benefit rule does allow for a minimal amount of private benefit to outsiders, but only so far that the benefit is “incidental” to the proposed charitable purposes of the organization. How do you know if the benefit is incidental?

1) It is the only way to accomplish an activity that is necessary to fulfill the organization’s charitable mission.
2) The private benefit must not be substantial in relation to the “overall public benefit        conferred by the activity.”

If an organization violates the private benefit rule, there is no leeway: its tax-exempt status under Section 501(c)(3) will be revoked.

As a nonprofit, you MAY NOT:

  • Offer ownership of any kind to any individual or company.

    • All assets are owned by, and remain with, the nonprofit.

  • Transfer, give or grant charitable donations back to a for-profit institution.

    Note: Paying for reasonable, budgeted costs for overhead for mission-related purposes is allowed.
  • Take in charitable funds that are not exclusively used for charitable purposes which serves the donor intent.

  • Complete transactions or engage in activities in which any of the following parties (insiders) financially or personally benefit from the resources of your tax-exempt organization as a result of their relationship to it:

    • Board members (unless they fall within your charitable class)

    • Management/key employees

    • Family members (unless they fall within your charitable class)

    • Any type of stakeholder

  • Provide any monetary or material benefit to any private entity or individual that does not directly fulfill the purpose of your organization.

Here Are Some Examples:

  • Private Inurement (applies to all aforementioned parties):

    • Paying excessive compensation to the organization’s CEO in the form of bonuses, fringe benefits, housing for below-market rent, low-interest or interest-free loans, etc.

    • Paying rent greater than market value for office space in a building owned by the organization’s CFO.

    • Using an interested party’s privately-owned entity for an activity over another and failing to pay fair or below market value.

    • Hiring a firm to provide consulting services at a rate that is greater than their standard hourly rate when one of the firm’s executives is related to a board member.

  • Private Benefit:

    • Spending more money than fair market value to pay for the food at a fundraising event.

    • Buying in excess from a privately owned company to conduct a program that satisfies the nonprofit’s mission.

    • Spending a significantly higher percentage of the nonprofit’s budget on overhead expenses than on the public benefit for which the organization was granted tax-exempt status.  

ADVOCACY DO'S AND DON'TS

Advocacy is defined as “the act or process of supporting a cause or proposal.” So, what does this mean for charitable organizations? Charities are in a unique position when it comes to advocacy, because each and every one of them has an important cause and message to get out to the world. From spreading awareness, to amplifying the voices of a local community, engaging in advocacy can be an important part of an organization’s mission.

WHAT IS LOBBYING?

Advocacy efforts come in many shapes and sizes. Lobbying is one form of advocacy that specifically attempts to target or influence legislation. Lobbying is a powerful form of charity advocacy, but with more power comes more responsibility. Charities are allowed to lobby. However, the IRS strictly regulates the amount and type of lobbying that charities can take part in. Why? Limiting the amount of time and money 501(c)(3)s spend on lobbying ensures that charities remain focused on the delivery of their charitable purpose.  

What’s the difference between advocacy and lobbying?

Just as all squares are rectangles, but not all rectangles are squares, the same is true for advocacy and lobbying. All lobbying is advocacy, but not all advocacy is lobbying.

Need a refresher on how the two are different? Lobbying targets a specific piece of legislation, while advocacy targets a broader cause or idea. In addition, the IRS does not restrict non-lobbying advocacy conducted by 501(c)(3) charities - while it does restrict lobbying activities of public charities.

THE KEY TAKEAWAY: SPREAD THE WORD WITHOUT BREAKING THE RULES

In both advocacy and lobbying initiatives, charities must strictly avoid getting involved with politics, elections and candidates, as these realms are completely off limits for 501(c)(3) public charities.

The Do’s 

  • Charities can center their advocacy efforts around education. If an effort is nonpartisan and educational, it falls under the category of acceptable advocacy for a public charity.

  • Charities can form coalitions with other 501(c)(3)s doing similar advocacy work. These coalitions are great ways to pool resources and get a message out to broader audiences.

The Don’ts

  • Charities cannot directly or indirectly participate in any political campaign on behalf of, or in opposition to any candidate for elected public office. This includes federal, state, and local elections. charities cannot endorse or oppose any candidates - even the dog catcher!

  • Charities cannot demonstrate political bias or partisanship in their advocacy and lobbying efforts.    

  • Charities cannot let lobbying constitute a substantial part of their organization’s operations.

 

Some Advocacy Examples, Explained:

A charity hosts a candidate forum in which it invites representatives of equal caliber from all political parties and viewpoints to discuss a particular topic.

ALLOWED: Because all views are represented, the representatives from each side are of equal caliber, and the forum is focused on a particular topic rather than on the candidates themselves, it is an educational event that is considered advocacy.

A charity produces voter education pamphlets that inform the public of issues related to an election that are factual, educational, and nonpartisan.

ALLOWED: Because the voter education pamphlets are nonpartisan and educational, they constitute an acceptable advocacy initiative for a public charity.

A charity conducts research on a particular issue or community, and publishes the results.

ALLOWED: Producing research and resources that are based on research conducted using acceptable methodologies are relevant and informative about the communities a charity serves is acceptable advocacy.

A charity partners with several other public charities to host an educational conference on a particular topic.

ALLOWED: Gathering to learn, network, and share information on a relevant topic is an educational effort, making it acceptable advocacy for a public charity.

A charity produces handouts for voters that are partisan and clearly endorse one candidate or position.

NOT ALLOWED: Charities may not engage in activities that are clearly partisan or endorse one particular candidate or position.

A charity hosts a candidate forum in which it invites a republican senator and a local democratic committee member to come and share their opinions on a particular topic.

NOT ALLOWED: Because the candidates are clearly not of equal caliber and standing, this candidate forum does not present all parties and viewpoints in an equal manner.

A charity hosts a debate for candidates in an election for public office.

NOT ALLOWED: Debates, unlike candidate forums, are not acceptable for a charity to host and participate in.