Published on March 21, 2014
Fundraising from America: Starting up and fundraising WELCOME TO... FUNDRAISING FROM AMERICA: STARTING UP AND FUNDRAISING We will be asking whether American fundraising is right for your organization, covering the tax & legal issues involved, identifying the opportunities and the pitfalls and developing a fundraising strategy outside and inside the USA.
Fundraising from America: Starting up and fundraising IS AMERICA RIGHT FOR YOUR ORGANIZATION? - American Constituency - Unique & Persuasive Mission - Tour or Exhibit in the USA - American Mission - No American Competition - Donors live outside the USA...liable to pay US tax because they are Americans -Do you understand the language & culture of philanthropy in America? - How does the tax and legal system work in respect to charities in America? - Who can advise us?
Fundraising from America: Starting up and fundraising Opportunities USA is a huge philanthropy opportunity, fantastic tradition of philanthropy, among the highest percentage of givers and highest levels of giving in the world. Americans inside & outside the USA expect to be asked to donate to charity. Grant making Foundations expect to be asked for money and the larger foundations fund huge projects throughout the world. Americans are amazing fundraisers, will form a committee and put on an event and set very high targets for their fundraising if they really believe in your organization.
Fundraising from America: Starting up and fundraising Pitfalls Unless you were born and bred an American, America is a foreign country. So it’s easy to get things wrong. American donors can be high maintenance. They expect extensive feedback, personalised information, with thanks, thanks and more thanks. Fundraising from American grant making foundations is time consuming and a steep learning curve.
Fundraising from America: Starting up and Fundraising USA CHARITABLE GIVING – Who Gives the most to what? In 2012 the total giving in the USA was $316 billion The US is number 1 in the world in terms of participation in giving, and also has the highest value of individual giving. From Corporations From Bequests From Foundations From Individuals Annually on average each person in the USA gives $694 per year.
Fundraising from America: Starting up and Fundraising USA CHARITABLE GIVING $316 billion by type of recipient organization 1% 2% 3% 5% 6% 7% 9% 10% 13% 13% 32% $0 $20 $40 $60 $80 $100 Individuals Unallocated Animals & Environment Arts, Culture, Humanties International Affairs Public Society Benefit Health Foundations Human Services Education Religion Religious Causes $101.12 Billion
Fundraising from America: Starting up and fundraising Why does an American support a charity outside the USA? Some major reasons: ● Americans have lived in your country and supported you. ●You are a school or university and your alumni live in America. ●Americans who live outside the USA want to support charities where they live with US taxed income & get a tax deduction. ●Your charity does work that particularly interests them. ●Your charity does work that isn’t done by a US nonprofit. ●Some existing supporters of your charity have moved to the USA and want to support your charity from US taxed income. ●Your charity tours or exhibits in the USA and attracts American donors. ●NOTE: Your database may be a goldmine - the most important American fundraising resource you own. ●Can you think of other reasons why your charity may be supported by Americans?
Fundraising from America: Starting up and fundraising What about US Grant making Foundations? What do they do? They fund non-profits that offer services. Some foundations offer services as well as making grants. How do I find foundations that may support our charity? Use Google or Foundation Search or Grant makers online (free) Overview: What is a Letter of Inquiry? 4 points when you consider an application to a Foundation: 1. Personal contact 2. Application; provide exactly what the grant-makers requires 3. Find a friendly American 4. One application doesn’t fit all
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Fundraising from America: Starting up and fundraising WHAT IS A 501(c)(3)? American non-profits, sometimes called charities, are very often referred to as 501(c)(3)s, particularly by philanthropy professionals. 501(c)(3) is the section of the Internal Revenue Code that describes tax exempt organizations. Private Foundation, Public Charity
Fundraising from America: Starting up and fundraising US TAX DEDUCTION Tax effective in UK = Tax deductible in USA ILLUSTRATION OF US TAX DEDUCTION Itemized deduction: Mary earns $400,000 and she makes a donation of $10,000 to a local non-profit. This reduces her taxable income to $390,000. If she pays tax at 35% this will save her paying $3,500 tax which means the donation only costs her $6,500.
Fundraising from America: Starting up and fundraising TAX DEDUCTION FOR EVERY DONATION US taxpayers are used to getting a tax deduction for every donation they make and they expect it. The benefit is to the donor: the opposite of Gift Aid! $250 and over must be substantiated by a receipt from the non-profit.
Fundraising from America: Starting up and fundraising YES! THATS CORRECT! NO TAX DEDUCTION FOR DONATIONS TO A NON-US CHARITY No tax deduction available if a US taxpayer makes a donation to a non-American non-profit e.g. to a UK registered charity. We’ll come back to this in just a few minutes but first………..
Fundraising from America: Starting up and fundraising THERE ARE DIFFERENT TYPES OF 501(c)(3) NON-PROFITS For example... 501(c)(3) PRIVATE FOUNDATIONS Private foundations are set up primarily to support public charities and are funded by an individual, group of people, or company, and are subject to detailed rules and restrictions including self dealing, annual distributions, excise tax on net investment income and limitations on private business holdings. These are safeguards to prevent abuse by the funders.
Fundraising from America: Starting up and fundraising 501(c)(3) PUBLIC CHARITIES When a US non-profit is set up the incorporators can choose to set it up as a Public Charity, not a Private Foundation. Public Charities are funded by the general public and by grants from foundations and public bodies. E.G. American Red Cross, Doctors Without Borders, Oxfam America. Public Charities are more lightly regulated than Private Foundations. SO NOW... If an individual taxpayer wishes to make a grant to a non-profit set up outside the USA, AND GET A TAX DEDUCTION, the donor can make a donation to an accommodating Public Charity and suggest the recipient. It can only be a suggestion. If the Public Charity doesn’t have full discretion & control over the funds it becomes a conduit, and no tax deduction. The US non-profit must establish that the non-US charity is a suitable grantee under US law.
Fundraising from America: Starting up and fundraising YOUR CHOICE IS…… If you want to attract donations from American taxpayers for your organization you must either (a) work with an existing US Public Charity that will accept donations and consider a suggestion of a non-US charitable recipient, or (b) set up an accommodating US Public Charity to support you.
Fundraising from America: Starting up and fundraising (A) WORK WITH AN EXISTING PUBLIC CHARITY E.G. American Fund for Charities www.americanfund.info The American Fund retain a percentage of each donation to cover its overheads. Minimum retained $50. Up to $10,000 7.50%. Next $90,000 5.00%. Over $100,000 $2.5%. Maximum retained from any donation generally $10,000. Evaluation $250 | Annual Renewal $150. No management or governance obligations but no name recognition, no individual listing online on GuideStar and no individual listing by IRS etc.
Fundraising from America: Starting up and fundraising (B) SET UP A PUBLIC CHARITY TO SUPPORT YOUR ORGANIZATION You are setting up an entirely independent organization in the USA. You can refer to it as a (brother or) sister organization, but should avoid getting into the habit of calling it “our ....”
Fundraising from America: Starting up and fundraising Nonprofit incorporation usually involves these steps: - Choose a business name that is legally available in your state. - Prepare and file your "articles of incorporation" with your state's corporate filing office, and pay a filing fee. - Apply for federal and state tax exemptions. - Create bylaws that will dictate how the corporation is run. - Appoint an initial board of directors. Hold the first meeting of the board of directors. - Apply for any licenses or permits that your corporation will need to operate in your state and local municipality. SETTING UP A NONPROFIT ORGANIZATION State of Incorporation
Fundraising from America: Starting up and fundraising Next, the new company applies for 501(c)(3) status from the Internal Revenue Service. This is done through a Form 1023. It is the 501(c)(3) status which confers exemption from tax on the organization and which means that donations to the organization will be tax-deductible. Negotiation with the Internal Revenue Service may be required. 501(c)(3) status, when conferred, is 'good' for all 50 states. This is not an instant process and can take many months. SETTING UP A NONPROFIT ORGANIZATION Application for Tax-Exempt Status
Fundraising from America: Starting up and fundraising Three groups are not required to file Form 1023: Churches, public charities that do not have gross receipts of more than $5000 in each year, and subordinate organizations exempt under a group exemption letter. SETTING UP A NONPROFIT ORGANIZATION Application for Tax-Exempt Status
Fundraising from America: Starting up and fundraising REQUIRED TO SET UP: SUMMARY - Name - Incorporate in a US State - Identify Board of Directors - Appoint a Registered Agent - Apply for a tax exempt status (Form 1023) - Negotiate with the IRS. May take several months. 501(c)(3) status, when granted, is good for all 50 States plus DC.
Fundraising from America: Starting up and fundraising MORE ON... YOUR NONPROFIT BOARD - Why Does My Startup Nonprofit Need a Board? - Who Should Be On My Nonprofit's First Board? - How Many Board Members Are On a Startup Nonprofit's Board?
Fundraising from America: Starting up and fundraising MORE ON... FORM 1023 - Form 1023 is a 29-page, comprehensive look at an organization’s structure and programs. Given the number of additional schedules, attachments and exhibits that may be required most Form 1023 filings range between 50-100 pages of information. - In order to receive a tax-exemption dating from the date of your incorporation, you need to file IRS Form 1023 within 27 months of your incorporation. - Does Form 1023 need to be notarized? - Can a form 1023 be e-filed? - What are the fees to file Form 1023?
Fundraising from America: Starting up and fundraising Fundraising Strategy TELL EVERYONE and put it everywhere, specially on your website and all fundraising materials. We are supported by xxxxx xxx xxxx and donations to xxxxx xxx xxxx from American taxpayers are tax deductible to the full extent allowed by law. Tell everyone on your database regularly. You have no way of knowing if they are American taxpayers.
Fundraising from America: Starting up and fundraising When you identify Americans, research them to identify the high net worth individuals and put them into leadership positions. Listen to them; they know the American way of fundraising. They know other wealthy people. Internet – make sure everything you produce, website Facebook, Twitter, emails, and hard copy publications gives American tax payers a reminder to make a donation.
Fundraising from America: Starting up and fundraising FUNDRAISING / GRANT APPLICATIONS – DIFFERENCES BETWEEN US & UK - USA is a foreign country. - America is insular. - Don’t confuse New York or Washington DC with the US of A. - Americans are patriotic. - Americans are, in comparison with Brits, still deeply religious. - Understanding American (the language). - Culturally Americans are proud of their independence. - Americans are very welcoming, generous. - Americans are not universally liked. -Failure in the USA is regarded as a learning experience. - Non Americans are usually given the benefit of the doubt for a while. - Americans are naturally positive.
Fundraising from America: Starting up and fundraising FUNDRAISING FROM...INDIVIDUALS “American” Website; “American” literature; “American” information Sponsorship; name recognition
Fundraising from America: Starting up and fundraising FUNDRAISING FROM... COMPANIES / COMPANY FOUNDATIONS Local, profitable In USA, see guidelines.
Fundraising from America: Starting up and fundraising FUNDRAISING FROM... GRANT MAKING FOUNDATIONS • Identify the Foundation. Foundation Search. Foundation Directory Online. • Review their grant-making history e.g. have they funded organizations/ projects similar to your organization/your project? • Review the application requirements to ensure you qualify. Deadlines. • Identify any personal contacts with the Foundation. Establish if the Foundation will communicate with you directly, email, telephone. • Establish if the foundation will give to you directly, or will only give through the 501(c)(3) supporting your organization.
Fundraising from America: Starting up and fundraising FUNDRAISING FROM... GRANT MAKING FOUNDATIONS [cont] • Prepare an application exactly as the foundation requests. It may need to be written as from the 501(c)(3) supporting your organization and signed by the President. • Ask an American to review your application and the covering letter to ensure it reads as from an educated person and an organization with the capacity to complete the project. • Say thank You! And ask why you failed if refused. • If you succeed report progress exactly as requested. • It’s a Naming Opportunity!
Fundraising from America: Starting up and fundraising FUNDRAISING FROM... SOCIAL MEDIA It all depends on your plan, and how you work it. And if you learn to work it right, it’s going to help you raise money. - Write a content marketing & fundraising communications plan. - Incorporate powerful storytelling into your plan. - Identify and build a fan base. - Be useful, generous & listen. - Keep it personal and you act as yourself. - Monitor what you’re doing, and what works; what doesn’t. - Make it easy for folks to take the next step. - Create a blog and made it the hub of your content strategy. - Be patient.
Fundraising from America: Starting up and fundraising THE MOBILE REVOLUTION EMAIL - 66% of Gmail opens occur on mobile devices, with only 19% opened on a web browser (Litmus) - 64% of decision-makers read their email via mobile devices (TopRankBlog). - 33% off email recipients open email based on subject line alone (Convince & Convert) . - Subject lines fewer than 10 characters long had an open rate of 58% (Adestra) . - Recipients often only read the subject line or the first few lines of an email. Include your CTA early on in your email. WEBSITES - People don’t surf on smart phones. 90% of searches on phones results in an action! - People are no longer clicking on links, they are tapping on phones and tablets whilst visiting your site so make sure you have large navigational banners ideal for thumbs and fingers. - Prioritise content and keep the layout simple.
Fundraising from America: Starting up and fundraising DONOR ADVISED FUND Donor-advised funds are charitable giving accounts offered by a sponsoring organization that are designed as an accessible, simple, and less expensive alternative to private foundations. Donors contribute tax-deductible assets (minimum contributions are usually $5,000) to their accounts, advise the sponsoring charity on how it should invest the assets so that they grow before they are granted, and recommend grants from their accounts to charitable organizations of their choice over time. The sponsoring organization does the record keeping and due diligence, and, unlike private foundations, can protect a donor's identity if that is requested.
Fundraising from America: Starting up and fundraising DONATED PROPERTY Tax deductible to the donor. Must relate to the exempt purpose of the non-profit. Property must be held for 3 years and cannot be sold and the money used to support for the exempt purpose.
Fundraising from America: Starting up and fundraising WHAT IS PLANNED GIVING? Planned giving, sometimes referred to as gift planning, may be defined as a method of supporting non-profits and charities that enables philanthropic individuals or donors to make larger gifts than they could make from their income. While some planned gifts provide a life-long income to the donor, others use estate and tax planning techniques to provide for charity and other heirs in ways that maximize the gift and/or minimize its impact on the donor's estate. WHAT ARE THE 3 TYPES OF PLANNED GIFTS? - First, outright gifts that use appreciated assets as a substitute for cash; - Second, gifts that return income or other financial benefits to the donor in return for the contribution; - Third, gifts payable upon the donor’s death.
Fundraising from America: Starting up and fundraising Chapel & York does everything you need to establish a 501(c)(3) charity, from initial discussions and setting up as well as maintenance and administration services. For more information & brochure downloads please visit: www.chapel-york.com/fundraisingusa
Fundraising from America: Starting up and fundraising Contact details Presenter: David Wickert +44 1342 871915 firstname.lastname@example.org Twitter @davidwickert Further information about all Chapel & York’s services can be found at www.chapel-york.com For latest information about our publications, seminars, workshops, webinars and much more, please follow us on Twitter @chapelyork PLEASE NOTE: This information was not intended to be legal advice. It is advised that you consult your own attorney in regard to your specific situation.
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