Fundraising from America - 'Managing the fundraising' 2014

Fundraising from America:
Managing the Fundraising
This webinar is designed for everyone involved with 501(c)(3) governance,
management and fundraising, including board members, officers and
development staff. This is also suitable for organisations wishing to learn the
requirements and the benefits of a 501(c)(3) prior to obtaining a
501(c)(3) status.
First, a quick recap on some key points from
‘Fundraising from America: Starting up and
Fundraising’…

Starting up and Fundraising
[Recap] Opportunities
USA is a huge philanthropy opportunity, fantastic tradition of philanthropy,
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.

[Recap]
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.

[Recap]
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.

[Recap]
(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.

[Recap]
(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 ....”

[Recap]
REQUIRED TO SET UP:
- 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.

Act in accordance with the bylaws
Ensure board members approve activities undertaken by 501(c)(3)
Annually elect officers who may also be
directors
Ensure that State & Federal Returns
are prepared and filed
What are the responsibilities of
Directors & Officers of a 501(c)(3)?

Directors & Officers Liability Insurance
Most experts think that nonprofits need "Directors and Officers" (D & O)
liability insurance.
Members of the board and/or officers of your nonprofit could be sued
individually or as a group.
Your board members are volunteers who often make difficult decisions.
They should have D & O insurance to protect them. Not having such
insurance can make it difficult to attract and retain good board members,
who simply cannot afford to serve if they run such risk to their personal
assets.

More on... Board Policies
Conflict of Interest
The IRS requires much more information from
501(c)(3) nonprofits these days. One area that
gets tremendous attention is potential financial
conflicts of interest, especially in regard to board
members.
In fact, the IRS Form 990 now asks, specifically, for disclosure of potential
conflicts of interest.
What Should a Conflict of Interest Policy for My Corporate Board Include?

More on... Board Policies
Whistleblower
Protecting whistleblowers is an essential component of an ethical and open
work environment. Whistleblower protection should not be viewed only as a
mechanism designed to avoid employee lawsuits.
Instead, protecting whistleblowers from retaliation and encouraging
constructive whistleblowing benefits nonprofits by increasing transparency
and by giving management the opportunity to learn early on of unethical or
unlawful practices directly from their employees rather than from the media,
law enforcement, or a regulatory agency. In addition, effective
whistleblower protection helps foster a work environment in which all
employees are held accountable, thereby improving performance and
empowering employees.

Your first Board Meeting
The first meeting of the board of directors of
your nonprofit is an important meeting.
Typically at this meeting, the Board of
Directors will:
-Acknowledge that the Articles of Incorporation have been filed (and approved, if that
is the case) with the state in which you are incorporating.
-Designate a specific bank as the official depository for corporate funds.
-Elect corporate officers, usually a President, Vice President, Secretary, and Treasurer
-Direct the Treasurer to pay organizational expenses
-Approve the corporate by-laws
-Approve the conflict of interest policy and require all board members to sign the
policy.

Annual Meetings
For many nonprofits, having an annual meeting is a legal requirement.
The organization will review its previous year's achievements, elect board
members and disclose account information. The nonprofit's constitution might
require public notice of the meeting and that certain items be on the agenda,
such as an address from the board chair.

501(c)(3) Financial Administration:
- Banks & Banking
- Credit Cards
- Brokerage Account for gifts of stock

Stationery, Receipts and
Donor Forms
- Name and address of the organisation.
- American paper size unique (its not decimalized).
- Send a written receipt for any donations of £250 or more.

Receipts for donations

Licence Agreements,
Registering Name / Logo
Safeguard your organization’s name by trade marking it
(in every State).

Anti-Money Laundering Strategy
Don’t accept significant anonymous
donations.
Retain the name & home address
and other contact details of every
donor.

Sanctions & Anti-Terrorist Guidelines
Charities should consider taking certain steps before distributing any
charitable funds (and in-kind contributions). These suggested steps are
voluntary. The purpose of these steps is to enable charities to better
protect themselves from the risk of terrorist abuse and to facilitate
compliance with U.S. laws, statutes, and regulations, with which all U.S.
persons, including U.S. charities, must comply.
Depending upon the risk profile of an individual charitable organization,
adopting all of these steps may not be applicable or appropriate. When
taking these steps, charities should apply a risk-based approach,
particularly with respect to engagement with foreign grantees due to the
increased risks associated with overseas charitable activity.

Document Retention
Below are the documents that need to be kept permanently
- Audit reports
- Checks (for important payments and purchases)
- Contracts (still in effect)
- Correspondence (legal and important matters)
- Deeds, mortgages, and bills of sale
- Depreciation Schedules
- Year End Financial Statements
- Insurance records, current accident reports, claims, policies, etc.
- Minute books, bylaws and charter
- Patents and related Papers
- Retirement and pension records
- Tax returns and worksheets
- Trademark registrations and copyrights

IRS Audit
By far the least welcome interaction your nonprofit
can have with the IRS is an audit -- the process where
an IRS employee examines your nonprofit's tax
returns, books, and records. Even for nonprofits that
have absolutely nothing to hide tax-wise, the audit
process can be disruptive and time-consuming, with
interviews and visits to your office not uncommon.
Why Would the IRS Want to Audit a Charitable Organization?
Potential Penalties for Noncompliance
Why Certain Groups Get Audited

What is a Registered Agent?
Every company incorporated in the USA is
required by law to have a
Registered Agent.
A registered agent, also known as a
statutory agent, is a business or individual
authorized by a US State to receive legal
notices on behalf of a corporation.
The registered agent for a business entity may be an individual member of the
company or (more often) a third party, such as the organization's lawyer or a
service company.
Failure to properly maintain a registered agent can affect a company negatively.

Programs and Grant making
- Identifying recipient organisations.
- Retain on file information capable of demonstrating that the organization(s)
you are making grants to are suitable grantees of a US nonprofit organization.
- Evaluating organisations outside the USA.

Form 990
IRS Form 990 is the tax document that
tax-exempt nonprofit organizations file each
year with the IRS. The 990 allows the IRS and
the public to evaluate nonprofits and how
they operate.
Beginning with tax returns filed in 2009 for 2008, nonprofits must file the new
Form 990 that requires more disclosure of potential conflicts of interest,
compensation of board members and staff, and other details having to do with
financial accountability and avoidance of fraud.

Form 990
Who has to file a 990?
- Private foundations. They file a Form
990-PF.
- Larger nonprofits that have gross
receipts of more than $50 ,000 (as of Jan 2010)
have to file Form 990 or 990-EZ.
- Small nonprofits with gross receipts of $50,000
(as of Jan 2010) or less must file the new form
electronic 990-N (e-Postcard) in order to
maintain their exempt status.

Form 990
What organizations are exempt from filing any Form 990?
- Churches. The criteria for being classified as a church
are listed in the Tax Guide for Churches and Religious
Organizations (IRS Publication 1828).
- Subsidiaries of other nonprofits.
- Nonprofits not in the system yet. If you are an
incorporated nonprofit in your state but don't plan to
apply to the IRS for exemption from federal income tax,
you don't have to file a Form 990.
- Religious schools.
- State institutions. Some state institutions are exempt
because they provide essential services (a university is an example).
- Government corporations.

When do we file the 990?
You must file your 990, 990-EZ, 990-N, or 990-PF by the 15th day of the 5th month after your
accounting period ends. So, if your fiscal year ends on December 31, the 990 is due on May 15 of
the following year.
If I want to see the 990 of a particular nonprofit, how do I do it?
Many nonprofits now make 990s available for viewing on their websites. You can view them at
Guidestar, an organization that compiles information about nonprofits.
Can a form 990 be e-filed?
An organization can file Form 990 and related forms, schedules, and attachments electronically.
However, if an organization files at least 250 returns of any type during the calendar year ending
with or within the organization's tax year and has total assets of $10 million or more at the end of
the tax year, it MUST file Form 990 electronically.
How difficult is it to prepare? Can we do it ourselves?
Unless you have substantial experience in nonprofit compliance, we do not recommend trying this
on your own. For an annual fee, Chapel & York undertakes everything necessary to maintain a US
501(c)(3) including Tax Returns. For more information please visit our website
www.chapel-york.com

Public Support Test
When a US corporation is recognised by the Internal Revenue Service (IRS)
under Section 501(c)(3) of the Internal Revenue Code as a tax exempt entity,
having declared in its application that it expects to be publicly supported, it
is classified as a publicly supported charity.
The organization retains its public charity status for its first five years
regardless of the public support actually received during that time. Then
beginning with the organization's sixth taxable year, it must establish that it
meets "a public support test" based on the previous five years. Following
the first five years, if it fails to meet the public support test for two
consecutive years it will be reclassified as a Private Foundation.

Public Support Test
There is a computation to establish if a 501(c)(3) is publicly supported. A
summary of the computation is as follows:
2% of total income over 5 years from individuals, companies, private foundations
public charities and state or federal government plus interest from investments is
calculated. If the total given by any individual, company or private foundation or
earned from interest is more than 2% the excess is disregarded. A computation is
then made which consists of a fraction, the numerator of which is all the donations
minus the disregarded excess, divided by the denominator which is all the donations
received. The remainder must be 33.3% or more for the organization to be a public
charity.
- Unusual Grants, 10% Facts & Circumstances.

State Registration
Most States have some requirement
for 501(c)(3)s to register if they are
planning to operate or to solicit
charitable gifts from people or
organizations resident in or located
in the State. All States have different rules.
New 990 Makes Nonprofit Fundraising Registration Unavoidable
The new IRS Form 990 has now made neglect of fundraising registration rules
impossible, at least for nonprofits with incomes of more than $25,000 per year.
Those nonprofits have to file a 990 or a 990-EZ, and the new forms require
information about where organizations are registered to fundraise.

State Registration – Key Points
Here is some basic information and tips about fundraising registration.
Be aware, however, that you'll need to do your homework on this issue
and/or get legal advice for your particular nonprofit.
- Register before you start fundraising.
- Register in your home state--this is called your state of domicile.
- Register in every state where you solicit funds. If you receive less than $250 in donations from a
particular state, don't register and do not send postal mail or email to that state. It's too expensive
to register where you receive little value. Several donation processing programs allow you to
screen out states.
- If you accept online donations, do register in Florida and New York state, even if you don't solicit
there. Those states require registration for simply accepting a donation from the state. If you are a
local or regional organization, consider donation software that will allow you to block donation
online from other states.
- Follow the rules of each state for registration, reporting, documentation, etc.
[Continued…]

State Registration – Key Points
- 38 states do accept the Unified Registration Form, but they often
differ in the documentation that they require. So you can't just
submit one registration to all of those states and forget it.
You'll need to customize each registration with the required documents.
- In most states that require registration, you also have to renew
annually. Each state's requirements are different and deadlines for renewal vary.
Fees for registration differ state to state.
- If you do not register properly in other states before you fundraise, your organization risks
penalties and even felony charges. Some donations have had to be given back as a result of not
registering or registering too late. Your auditors and grantors will also require that your
registrations are in order. Since the new 990 requires organizations to report where they are
registered, it is impossible to ignore out-of-state fundraising registration.
Chapel & York’s administration service deals with State Registration.
More info at www.chapel-york.com

State Registration
RE: Internet Fundraising
The Internet has revolutionized nonprofit fundraising and has had an equally
big impact on fundraising registration. Today, even the smallest nonprofit can
reach a nationwide audience through an inexpensive website or email,
and collect contributions from donors location anywhere in the country.
Consequently, many small nonprofits that have never had to deal with
registration other than in their home state must now figure out where and how
to register in multiple states…
Under the Charleston Principles (Google for a helpful flow chart), you do not need to register with
a state simply because you have a website that people in the state can view. Something more is
needed, such as sending a fundraising email to state residents, applying for grants from private or
government funders in the state, or making telephone solicitations there. These guidelines are not
legally binding on any state. Most states follow the Charleston Principles. Two states - New York
and New Jersey – DO NOT follow these principles.

State Registration
RE: Social Network Fundraising
If you use social networks to solicit contributions and you meet the requirements for an interactive
or non-interactive website, then you would have to register. For example if your nonprofit's
Facebook page contains a "donate now" button, you would be soliciting contributions through the
page. A Facebook page would be considered an interactive website. You'd have to register if your
nonprofit targeted a state's residents or received substantial contributions.
RE: Charity Portals
One of the best known charity portals is Network for Good, which is operated by a donor-advised
fund - a tax exempt nonprofit that exists to distribute funds to other nonprofits. Donors can use
these websites to make online contributions to virtually every tax-exempt nonprofit in the United
States. Donor Advised funds like Network for Good have usually already registered in all the states
where they are required to register. It seems likely that a nonprofit that receives money from such
a fund would not have to register in a state for that reason alone.

Events
- Register in the state
-Sales Tax
- US non-profits are exempt from sales
tax in some US States
Auctions
Donors (successful bidders) may take a tax
deduction on the difference between the fair
market value and what they pay BUT they
must know the fair market value
before they bid.

Saying Thank you
Saying thank you to a donor ends one transaction but builds a bridge to
future support and deeper engagement. Do it well, and you are on your way
to future fundraising success.
- Speed
- Make it personal
- Reference what the gift was towards
- Acknowledge past giving
- Include a PS. Mention a social network, new blog etc
- Contact details for any questions
- Never ever ask for a second gift! a.k.a ‘the soft ask’

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

Contact details
Presenter:
David Wickert +44 1342 871915
david.wickert@chapel-york.com
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.

Fundraising from America - 'Managing the fundraising' 2014

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Fundraising from America - 'Managing the fundraising' 2014