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Archive for the ‘ Fundraising ’ Category

Three Simple Fundraising Campaigns for Summer’s Slowdown

Monday, June 24th, 2013

By FirstGiving.com
Creative_Wallpaper_Summer_016436_
1. Create a summer Fundraising Campaign

  • Give it a name, for example, Dog Days of Summer Campaign
  • Set an end date
  • Provide a specific fundraising goal
  • Use Constant Contact (website, newsletter, email)
  • Set realistic expectations

2. Start on your Fall event or campaign

  • Don’t wait until August to begin planning
  • Start marketing and event promotion now
  • Recognize fundraisers and teams over the summer
  • Keep fundraisers engaged & motivated (via constant contact or get together)

3. Leverage active people already outdoors this summer

  • Ask everyone in your database who is running, biking, hiking etc to dedicate their time to raise money for their efforts on your behalf
  • Offer to pay event entry if they get pledges of “x” amount
  • Encourage them to have their event around a big event (e.g. Memorial Day, Father’s Day, Fourth of July, Labor Day or Back to School)

Lean In! Fearless Fundraising.

Tuesday, May 7th, 2013

If you aren’t aware of the Lean In phenomenon; then lean in and wake up! The concept applies to everyone in every industry. It certainly applies to professional fundraising. Here are five tips I’ve collected from our fearless peers who have lead the way in fearlessly Leaning In.lean_in

1. Focus on your deep spiritual conversion and create your clear, compelling mission before you even think about making an ask: As put forth by former monk and popular consultant Charles LaFond. Lean in together and think about what you’re asking for.

2. You’ll Never Know if you Don’t Ask: As Jerold Panas so eloquently puts it, “The most heinous sin of all – you didn’t ask.” Lean in and ASK.

3. You’ve got to talk to the decision-maker: So “start at the top” says fearless fundraiser Anne Garnett. She further advises, “It’s a lot faster than trying to work your way up from the bottom.” Lean in and ask the one who holds the key to the bank account.

4. Don’t fill the Silence: Roxanne Hinds and Dana Lucka say, “He who speaks first looses”. Lean In and Listen.

5. And finally, I fearlessly Iean in by taking myself out of the equation and taking the focus away from the fundraising word by exchanging it with “Advocating and telling your story for the Cause”. The change in ones mindset is extraordinary when you lean in as an advocate rather than a fundraiser. Lean in as an Advocate, tell your story, and the money will follow.

7 Things That Will Make You a Better Fundraiser

Tuesday, April 16th, 2013

By Margaux Smith

fundraiserThree years ago, I didn’t even know fundraising was a profession. (Some of the contributors to this blog have been raising money for charity since I was a baby!) But when I arrived, I threw myself into the deep end and have consequently learned a great deal in a short time.

Most of all, I’ve learned that no amount of study can replace years of experience. So while I wait for the time to fill me with wisdom, I’ve learned to improve my fundraising in more immediate ways. Here are seven ways I’ve discovered. Feel free to challenge them or add your own in the comments.

1. Brush up on your teamwork skills

Working as part of a team is necessary in nearly every type of fundraising role. And sadly, almost all of us are stuck with at least one colleague who is far more concerned with number one (it might even be you). I can be a bit of a lone wolf, so this is something I’ve had to make an effort to improve, but goodness, is it ever important. The quality of your work, and your office morale, depend on it. So join an after-work sports league, or club, go out and meet new people. Practice listening, compromising, and working towards a common goal. You might be surprised how good the result can be when you let go of a little control.

2. Write letters to people you love

By hand. With real stamps and everything. I find this especially useful as a direct mail copywriter, but all fundraisers write to donors at some point, whether it’s emails, social media, or thank you cards. Writing real letters is a great way to remind yourself how special the written word can be. Your communications will become more conversational, personal, and heart-felt. And chances are, you’ll get an equally thoughtful response in your mailbox before long. Then you’ll have the chance to see how much it’s possible to connect with an outer envelope (my best friend addresses her’s to ‘Miss Margaux Smith’ and my Grandpa types my details straight from his old-timey typewriter). You’ll experience the joy of tearing it open to reveal the care and consideration enclosed, knowing they took the time to sit down and create something special, just for you (I like to add cute animal stickers to my letters for a bit of visual flare). It will just make your whole day.

So try it. Remind yourself why direct mail isn’t going to ‘die’ anytime soon. Because it’s awesome.

3. Donate and volunteer

This one’s a bit of a no-brainer. You should donate to your own charity fairly often as a mystery shopper to ensure your donors are having a good experience. Major gift fundraisers should be donors so they can solicit with genuine conviction. And I’ve already written about why it’s so important to get away from your desk and out to your front lines to reconnect with the emotion of your work.

But I also think it’s vital to do this outside of the office. Give your money and time to causes close to your heart, where you can separate yourself from the internal politics and paperwork. This job can be frustrating – it takes effort to keep from becoming jaded. But it really helps to revel in the sheer joy of being a donor. Damn, it feels good.

4. Fill your brain bank

We’re all creative beings. And the process of putting ideas to paper becomes easier as our brains become more full. If you’ve seen an experienced creative at work, you’ll know their brilliance seem to come out of thin air. You can present them with a problem that you’ve been trying to solve for hours and, within 30 seconds, they make a suggestion that leaves your ideas look like a sack of turds.

Of course, it’s not unattainable for any of us, but it does take a great deal of effort and practice. What they’re doing is pulling from the vast wealth of knowledge filed away in their mind – everything they’ve ever read, watched, learned, and experienced. The trick is to practice pulling from it, and like many aspects of fundraising greatness, this takes years to develop.

So in the mean time, we can fill our brain with as much variety as possible and get to filing it away for future use. Read. A lot. Not just about fundraising, but about anything that interests you. Let your imagination run wild as often as possible. Go on adventures. Get uncomfortable. Travel. Challenge yourself. Watch old movies, new movies, television that makes you laugh and cry and think. You can even benefit from unintellectual smut. I’ve been able to write in the voice of a teenage mother because I watch MTV’s Teen Mom, and the voice of a young girl with Asperger’s after I learned about it from an America’s Next Top Model contestant who lived on the spectrum. Yes, really. You’d be surprised what you can pull out of that ol’ brain bank. The more you vary the contents, the more interesting and diverse your work will become. So be interested in as much as possible. (I’m still waiting for the appeal where I can put my extensive knowledge of ornithology and paleontology to good use…)

5. Make mistakes

I put my foot in my mouth on a near-daily basis. But it sure does speed up the learning process. (As long as you’re not repeating the same mistakes.) And as a bonus, it also gives you the opportunity to show people that you can eagerly admit when you’re wrong and apologize. This proves you’re human, and seems to be one of the most endearing qualities a person can possess. So take risks, put yourself out there, and recognize that it is OK to be imperfect. (Donors will love you for it too.)

6. Don’t be a snob

Following on from above, recognize that, in a sector this vast, there is always more to learn. Even if you’ve been around these parts for more than 20 years and you’ve seen it all, you can’t see into the future. (If you can, call me. I want to know you.)

It’s impossible to know what’s around the corner in this ever-changing fundraising world. These days, mobile’s growing, online/offline integration is becoming increasing crucial, and baby boomers are taking over the traditional donor base. These problems were hardly talked about a decade ago (from what I can gather), and we’ll certainly be concerned with other things a decade from now. So I don’t care who you are, you don’t know everything and you never will.

By all means, please bring all the knowledge and experience you can to the table. But be open to what others are bringing. We’ll all be stronger for it. Be confident but adaptable, and remain a great listener – you’ll stay relevant until the day you die. The people I look up to most in this sector are the ones who embody this mindset.

7. Give a damn

I reached a point last spring, around my 6-month mark as a copywriter, where I was boiling over with self-doubt. Struggling and convinced I’d be fired any day, I was stuck in the creative gap, as Ira Glass describes it. But at that crucial point, I got a pep-talk from one of my bosses. I confided my fears, telling him I didn’t feel I was a very good writer. My ideas weren’t interesting enough and I wasn’t sure I could cut it in this business.

He looked me straight in the eye and said (with his Geordie conviction and much more cussing than I’ll include here), ‘Well, no. You’re not very good. But you will be. Because you give a damn and that’s something nobody can teach.’

He’s right. In this business you have to care. Really care. With every fiber of your being. So much that it hurts. That you get angry and you cry and you do something about it. Whatever you can, every day.

It sounds simple but we all know this sector can be tough. Outside, people don’t understand us. They think we’re money-grubbing, manipulators. Inside, it’s not always better. You hear ‘no’ so often, it can sometimes feel like the whole world is trying to knock you down. So please don’t stop giving a damn. And if you do, kindly get out.

“has been published prior on 101fundraising – Crowdblog on Fundraising, http://101fundraising.org/

5 Ways to Validate Giving Decisions & Drive Retention

Friday, January 18th, 2013

By Ashley Halligan

Matthew Mielcarek, the VP of Consulting at Charity Dynamics, recently submitted an article to the company I work for http://www. softwareadvice.com/nonprofit/crm- software-comparison/ with some pretty timely, pretty fantastic, and pretty prescriptive advice for nonprofit organizations entering the New Year. Bringing in the December giving trends — and the New Year, Mielcarek’s article outlines donor retention strategies — specifically, how to retain the newly acquired holiday donors.

With a third of annual donations collected in December, many by first-time donors to an organization, finding a way to keep as many of those as possible going into a new year is a retention strategy proving quite valuable over time. A 2011 donorCentrics Internet and Multichannel Giving Benchmarking Report https://www.blackbaud.com/files/resources/downloads/WhitePaper_Multi ChannelGivingAnalysis.pdf shows that 70 percent of first-time donors won’t donate again. Here are five steps Mielcarek suggests to foster lasting relationships with as many of them as possible.

1) Mielcarek says, “First time donors are qualified leads.” Therefore, consider first donations an acquisition gift. He goes on to suggest implementing a new donor conversion plan with the end-goal being to establish an ongoing relationship

2) Secondly, he says to be mindful of what a new donor may be communicating with you. He suggests the following metrics to gain insight to constituent behaviors: gift amount, billing city/state, solicitation campaign, and giving channel. He says that analyzing these key points is valuable. “Online acquired donors, for instance, generally have poor online retention; we know that a multichannel communication strategy will be important. In contrast, offline acquired donors are far less likely to cross the multichannel bridge and a single channel communication strategy may be appropriate.”

3) Mielcarek also emphasizes the importance of showing gratefulness to donors. One NTEN and Charity Dynamics study shows that 21 percent of donors say there were not thanked for giving. He says that follow-up thank yous are also of immense value. Tell them how your year ended in terms of its goals. Show them they’re donation made an impact to their overall mission.

4) He adds, “Engage relevantly.” Beyond thank-yous, communicate with your donors and supporters on an ongoing basis. Personalize messages based on constituent interests, affinities, and locations. Keeping websites up-to-date and engaging is a key element to achieving lasting constituent interest too.

5) Lastly is the actual conversion to the next stage of giving, Mielcarek says. This stage involves suggesting an affinity-driven gift — whether that be a “renewal gift, or an upgrade or graduation to a monthly or mid-level giving program.”

Must Have Fundraising Apps for Your Smart Phone

Wednesday, October 17th, 2012


Whether you’re a social entrepreneur, in the business of federal grant writing, or you scurry around planning special events; there is most likely an app out there created to ease the way. Here are my top five as of October 2012:

1. Kickstarter 101

Kickstarter is a funding platform for creative projects, everything from films, games, and music to art, design, and technology. Kickstarter is full of ambitious, innovative, and imaginative projects that are brought to life through the direct support of others. Since its launch on April 28, 2009, over $350 million has been pledged by more than 2.5 million people, funding more than 30,000 creative projects, now that’s a kick-start!

2. JustGiving

Allows fundraisers to keep track of what they are raising in real-time, it alerts you each time a donation is made and you can easily share with your contacts. Furthermore, if you know who just gave, you can thank them in real time as well! Nifty.

3. Rally.org

Set up a social donation page in minute’s using Rally’s fundraising platform to share your story in a new way. Easily customize a cause donation page with your own design or use one of their templates. It rids you of the cost and burden of needing to create a merchant account for your nonprofit in order to accept donations.

4. The Razoo iPhone App

Razoo enables you to manage your fundraisers and engage your donors. You can keep track of each donation, view your fundraising progress, ask people to give, and thank everyone who makes a donation. A one-stop iPhone fundraising app!

5. Fundraising Basics

This app is perfect for those just starting out in fundraising or those needing fresh ideas for the events they are coordinating. Full of tips and tricks, Fundraising Basics provides you with time saving methods and information to tackle the obstacles you may encounter. In this Android app you will find: 10 things your fundraising plan must include and how to put it together, 12 things your website must tell your visitors, and 6 common-sense but overlooked ways to find untapped pools of donors – among other advice.

What was Trending in Fundraising this September 2012

Tuesday, October 2nd, 2012

Monitoring fundraising/philanthropy blogs and articles this past month, here is what’s trending in fundraising this past month:

1. How to Raise Money via Facebook: We’ve got the “21 things you should know about facebook” type of articles, how nonprofits can use facebook ads effectively, and my favorite, separating your personal facebook page from your non profit page; sounds simple – not necessarily so….

2. Year-end Fundraising: Just yoga’d the Autumnal Equinox and simultaneously my in-box is over-loading with solicitations to prepare for year end. It’s reminiscent of school supplies showing up in Target the day after the 4th of July. What was out there in September: how to do it, start it now, get your board to help, hire someone to do it for you now!, help your donor’s say ‘yes’, and year-end mistakes to avoid. It’s some good stuff; read up on it NOW!

3. The Iphone 5: Not so much fundraising, but certainly trending and with that there are new fundraising apps and fundraising-use chatter. For example: “think face to face – think mobile”. Or this new app: Shoparoo has partnered with Proctor & Gamble and Unilever, who produce brands like Dove, Suave, Ragu and Skippy, to raise money for schools. Consumers essentially donate (report) their purchasing habits. You use the app to submit receipts from super-centers, groceries, clubs, pet stores, dollar stores, convenience stores and drug stores- a portion of the proceeds arrive at your designated school; but beware OR prepare for coupons galore filling your in-box.

4. Saying “Thanks”: Clearly this September trend is securely attached to many nonprofit’s rounding the corner to their fiscal year-end. From the “art of saying thank you” to “anyone can say thank you – just have someone do it”.

5. Political Fundraising: This could very well remain on the ‘what’s trending’ short list long after November 4th. A couple new ones to be mindful of: The Chronicle added, “Where the 2012 Presidential Candidates Stand on Key Nonprofit Issues” by Suzanne Perry. The Non Profit Times included, “With Election Around The Corner, Charities Must Tread Carefully” by Janice Ryan & Ronald Jacobs. I encourage you to read both if you haven’t already.

If you want to contribute to ‘what’s trending in fundraising’, give me a holla at
marcie@wagnerfundraising.com.

Arrrrgh! Some People are so DIFFICULT – or is it me?

Monday, September 17th, 2012

I believe the real answer is that it’s “us”; personality types not meshing. So where am I going with this? I hate conflict. Heck, I
lose sleep over it while others shrug their shoulders and move on, or they kind of love it.
A successful fundraising program is directly tied to how well you get along with those involved; and how well those involved get along with each other. You will raise more money within a joyful, collaborative team. Conflict creates distraction, and distraction takes your eye off the prize; reaching your fundraising goal.
Here’s a quick and easy solution to conflict resolution: Personality Assessments. Most of you are familiar with Myers Brigg’s and may recall your letter type-indicator. I don’t recall mine, but know it was the same type as other fundraising professionals in the room; and very different than the lawyers.
I just took a similar personality assessment called DiSC®. It’s also designed to help you work with different personality types. This article is not an endorsement for any particular type of test, rather an encouragement that every few years you take one. A refresher course on why some people get on so well with a person you wish would disappear by clicking your heels a few times.

Understanding your true self and how you are perceived by others is pretty important as a fundraising professional. One of the first things I
tell a new client is that, “This is going to be hard work, if fundraising were easy, everyone would do it successfully.” Next, I tell them that
we’re going to have FUN! Authentic enthusiasm is infectious, and the money follows.
Take a personality assessment. Find out how people perceive you, better understand other temperaments and hone your ability to identify them so you can control the traits which are in conflict with theirs. We know you can’t change people, so managing conflict sits solidly on you. By knowing yourself and changing your behavior, you will do a better job of avoiding conflict when it pops up and raise funds rather than tempers.

Wondering where my personality assessment lands? First you need to know what four personalities types are offered: Dominance, Influence, Steadiness,
and Conscientiousness. I was almost perfectly balanced between two types according to the DiSC®: Conscientiousness and Influence. Here’s the irony,
according to the assessment, Conscientiousness and Influence types should struggle. What does that say about me? While I’m a critical thinker, detailed and orderly (Conscientiousness); I am also prone to persuade others to get involved and ensure results are not only accomplished but exceeded (Influence). Lastly, I’m considerate of others because I don’t like conflict (aha!). The assessment does seem to define what it takes to successfully raise money: one needs to be an authentic, fearless, people person AND the nerd who totally digs research and wins those grants. Cheers to personality assessments!

Fundraising: What’s Trending this Month

Friday, August 31st, 2012

Monitoring fundraising/philanthropy blogs and articles this past month, here’ what’s trending in fundraising:

1. Political Fundraising: Shocker! More specifically, campaign volunteers giving first before asking. Does celebrity endorsement/giving hurt or help? Secret, non-traceable data-mining for the perfect prospective donor.

2. Livestrong: Hum. Good guy or Bad guy? Drops the doping fight (admission of guilt?) and bolsters Livestrong charities (again!). Two things are certain, this guy has a steadfast core group of donors and he made silicon bracelets must-have bling.

3. Should Non Profits Jump on the Social Media Train? Gosh, this is topic trending for 2012 for sure. Current or on-going discussion: small non profits are missing out by not utilizing social media, what social media increases google rankings (kinda varies but pretty much: Facebook, Instagram, Flickr, YouTube, Pinterest, Twitter, LinkedIn), How to use Social Media to raise money and so on….

4. Women are more Generous than Men – so pay attention to us! Not certain why this came up so much this month, could be driven by the Chronicles’ recent blog on the topic – those trendsetters!

5. Design: Website, Colors, Image, Slogan, Name….lot’s of branding chatter to increase your nonprofit chatter.

Start Your NonProfit for Sustainability: Part Two Fundraising

Tuesday, June 26th, 2012

Finally, you are now in business and we can start fundraising for your organization in earnest.  Nonprofits, like most start up businesses, begin with the founder personally (and perhaps your board members) funding the organization until it can be funded with outside sources.  If you have to fund the organization yourself at the beginning, be sure to keep meticulous records of what you have put into the organization and be clear about its intent. For example, whether your funding is a gift or a loan to the organization. Here are some creative, fun and traditional ways to fund a nonprofit organization:

  1. Sell Something.  Collect and sell items on Ebay or Craigslist to raise your start-up capital.
  2. Borrow Against Life Insurance Policies.  If you have a life insurance policy, check to see if it has cash value. Most policies start accumulating cash value after a certain period of time.  When you borrow against your life insurance policy, your policy stays intact as long as you continue paying the premiums when due.  If you die while there’s an outstanding loan against your policy then the face amount is reduced by the loan amount. The nice thing about borrowing against your life insurance policy is that there’s no credit check, or income verification like most other loans. All you have to do is call you insurance company and let them know you want to borrow the cash value.
  3. Borrow from Family and Friends.  Your friends and family are a good source of capital fundraising. This might be one of the most cost effective ways to fundraise for your business—that’s if your friends or family members are not asking for interest on the loan.  You can also protect the spirit of the transaction by putting your agreement in writing and making small payments as soon as you can.
  4. Grants.  Depending on what your business is there are a number of small and large corporations that give away money in the form of grants.  Grants are usually competitive in nature, but once you receive the money repayment is not required or expected.  Grant amounts vary and some may have conditions. Once your grant period is complete, you should mail the grantor a final report clearly indicating what was accomplished with the grant money. This should be done whether or not it is required.
  5. Fundraising Registry Sites.  There are many fundraising sites that are geared toward nonprofits.  Most fundraising sites have fees or a percentage that you are required to pay based on the amount of money you raise.  The fees the site owner may charge could include a monthly user fee, or credit card fee and other nominal charges.  You should check before you start using the site.  Once you’ve set up your fundraising idea on the registry then it is up to your efforts to send your site link to everyone you know and request a donation.  Let them know how their contribution will help you and this will motivate donors. This is a fun way to raise money through your own creativity and watch your money grow on your site. Don’t forget to say “thank you”. Some fundraising registry sites to research are Network for Good and Razoo.
  6. Place a Donate Button on Website.  More and more nonprofits have a “donate” button on their websites.  If your ultimate goal is to fundraise then you need to consider a “donate” button on every page of your website. The internet technology today makes it easier for individuals to donate anytime without leaving the comfort of their home.

If you find a couple or even just one of the above idea’s to make sense and feel it will give your new organization enough cushion to seed your program – I would recommend that you also give some thought to investing in a part-time fundraising professional. Oftentimes the first investment in a fundraising professional is a consultant; which is smart as it most likely will bring in more money sooner rather than later. It is important to note that it may be more beneficial to your organization in the long run to have them on staff. Whichever direction you take, give thoughtful consideration to the level of importance those donor relationships are to offer your organization sustainability over the long-haul.

Start Your Nonprofit for Sustainability – Part One

Wednesday, May 16th, 2012

Part One of our series in starting a nonprofit will guide you through the steps of formal incorporation. Part Two of our series will provide you with proven ways to raise those first dollars for your nonprofit. Let’s begin.

So you’ve come up with a great idea and a vision to form a nonprofit organization. But where do you start? Here we’ve provided your road map to get a new nonprofit off the ground with sustainability always in mind. The process of forming and incorporating a nonprofit is similar to a corporation, except for a few differences. A nonprofit cannot be formed from any of the following entities: Sole Proprietorship, Limited Liability Corporation or a Corporation “C” or “S”.

A nonprofit, like a corporation, is a legal entity separate from the founder(s); it can survive the life of its founder(s) and can exist infinitely. Unlike a corporation that is owned by its shareholders, a nonprofit does not have shareholders and is not owned by anyone, but is managed by the board of directors. The other distinct difference between a corporation and a nonprofit is how the income is taxed. Now, let’s take you through the process. 

Step One: Recruit a Board of Directors.  A board should include diverse representation from the following: finance, legal, someone who represents or is considered an expert with regard to your mission, someone who represents the people you exist to serve, local corporate executive(s) – specifically from a company who tends to fund organizations like yours, community/professional volunteer(s) – persons with a network of wealth, and another nonprofit executive. Ensure that you have a job description in place which clearly indicates board member expectations, including all information related to your nonprofit. Expectations should include: governance, financial support, and hands-on leadership. You do not want a board of directors that feels “just showing up” fulfills their duty. Finally, you never stop looking for good board members. Your board should have a set tenure to ensure there is always room for fresh faces, ideas, and connections.

Step Two: Formation Meeting. The formation meeting is a meeting of the initial board of directors to vote on incorporating and pursuing the tax exemption status as well as to establish the purpose of the nonprofit. During this meeting and all subsequent board meetings, make sure to take meeting minutes to show a unanimous agreement by the board before moving forward.

Step Three: Naming Your Nonprofit. Name selection is important because it identifies your purpose and creates your identity and brand. Pick your organization name like you pick your child’s name—repeat it often, pretend to answer the phone using the name to hear if it has a nice ring to it. You can choose almost any name you want for your organization as long as it is not already in use. You can check name availability on your state’s governing website to see if it is available before you file it. Generally this is the secretary of state’s office.

Step Four: Incorporate.  The incorporation process is similar to that of a corporation. The Articles of Incorporation are prepared and filed with the state’s governing body; again, typically the Secretary of State’s office. Some states have sample articles which you can obtain and use in drafting your articles, however, meeting the state’s minimum filing requirement does not necessarily mean you meet the IRS’s requirements. Make sure you properly and carefully draft articles of incorporation that meet the requirements of the IRS if you plan to apply for federal tax exemption; which you will. There is a filing fee associated with this process paid to the state. The fee for the state is usually around $100; the filing fee for your tax-exempt status is around $850. 

Step Five: The Bylaws. You are required to prepare bylaws for your nonprofit. Bylaws are the rules used by the board to govern your nonprofit. Most states do not require a copy of the bylaws to be filed with the state. Regardless of filing requirements, it is a state law requirement that an incorporated entity have written bylaws. The IRS will require a copy of the bylaws to be filed with your application for tax-exemption.

Step Six: Obtain your Federal Employer Identification Number (EIN). Once you’ve completed your paperwork, you will need to apply for an Employer Identification Number (EIN) also known as a federal tax ID from the IRS. You can do this quickly and easily online. Don’t forget to print out a copy for your permanent records. You will also need a copy to submit to the IRS with your tax exemption application. To apply for your EIN visit the IRS’s website. It is important to note that simply holding an EIN number does not mean you are approved as a 501(c)3 by your state or the IRS. You can raise money for your organization prior to approval. However, be mindful that more often than not, granting organizations require an approved 501(c)3 and will ask for a copy of your approved status letter.

Step Seven: Application for tax exemption to the IRS. After you have incorporated your nonprofit and obtained your EIN, then you can start your tax exemption application to the IRS using IRS Form 1023. The form can be obtained at the IRS website. This is a comprehensive application. You must carefully read the instructions, learn about the laws of compliance, complete the application, and collect & assemble the attachments. Hiring a professional to help you is highly recommended. If you are attempting to do this on your own, the IRS estimates a few hundred hours are necessary to complete this application. After your initial review, complete the application to the ‘letter’ of their instruction. If your application is not clear or missing important information, it will be sent back to you for more information. If it does not fit within the tax exemption regulations, it will be denied. As mentioned above, there is a fee associated with this application; approximately $850. The fee changes periodically, so be sure to check the filing fee before you submit the application. The IRS is currently taking between 6-8 months to assign the application to an exempt organization specialist. If your application is approved, you will get a “Letter of Determination” that classifies your organization as tax exempt. The nice thing about this long process is that the date of your exemption is retroactive to the date that the IRS first received your application. This means that if you did receive a donation requiring 501(c)3 status prior to your approval, you will ultimately be in compliance with the funding organization and the IRS. Yet, it is not recommended to raise funds externally until you receive your Letter of Determination.

State Tax Exemption. Most states recognize and accept the federal tax exemption “Letter of Determination.” However, there are a handful of states that have additional state requirements to be income tax exempt for state purposes. You will have to consult your state’s governing body to see if there are additional state requirements.

Ongoing Compliance. After you are officially incorporated as a nonprofit organization, there are a handful of things that you must do to maintain compliance with state and federal requirements. Some states require an annual report. Most states require an annual corporate renewal, and some states do not require state income taxes to be filed unless the nonprofit receives a certain threshold income.  As you can see, each state operates differently. The key is to keep yourself informed and up-to-date with the requirements of your specific state. On the federal side, IRS Form 990 or a variation of Form 990 is required to be filed annually. This is the annual tax return form for nonprofit organizations regardless of income. Currently, the law states that if you fail to file Form 990 for three consecutive years, the IRS will automatically revoke your nonprofit status. If this happens, then the nonprofit can no longer receive tax-deductible contributions. Additionally, you will have to reapply for tax exemption again. You have taken the time to build your nonprofit, so take the time to take care of it and remain compliant.

Let’s quickly review your nonprofit incorporation steps: 

  • File the certificate of incorporation
  • Select individuals to serve on the board of directors
  • Develop vision and mission statements
  • Establish bylaws and board policies
  • Obtain an employer identification number (EIN)
  • File for federal tax exemption
  • Follow state and local nonprofit regulations

Next month look for a step by step process to raise those very first dollars for your newly incorporated nonprofit.