| How to Create a Budget for Your Fundraising | | | | thinking in bigger terms, you may be wise to set |
| Event | | | | up a charitable organization that will be exempt |
| The necessity of creating a budget for your | | | | from taxes under the IRS Section 501 (c) (3). |
| fundraising even cannot be stressed enough. It is | | | | The reason for this is that whatever money you |
| imperative to know how much everything is going | | | | get is considered part of your income and you |
| to cost so that you will know what to charge and | | | | have to pay tax on it yourself, even though you |
| so make a profit. Not only that, but records of all | | | | are not going to keep it. The IRS will want to |
| monies received must be kept properly so that | | | | know exactly how much you made and where it |
| no one can be accused of doing the wrong thing | | | | came from and what you did with it. If you can't |
| with the funds. Once any hint of wrongdoing | | | | answer them, they will - to put it mildly - be |
| taints your cause, your sponsors will drop you like | | | | annoyed. And you will be in hot water. |
| a hot cake. | | | | Another reason is that at least some people - and |
| So how do you create a budget? You must get | | | | maybe most - will want a receipt so they can |
| quotes for all your costs. Every single thing that is | | | | write that donation off on their tax. If you give |
| going to cost any money must be written down. | | | | them a personal receipt it cannot be legally used |
| It may be that you can find a cheaper alternative | | | | for that purpose. They will want to know how |
| or get something donated that you thought you'd | | | | their money is going to be spent and you are |
| have to pay for, but it all has to be down there in | | | | accountable to them for it. If you have an |
| black and white. | | | | organization, they will be able to verify your |
| You may need to pay for entertainment, catering, | | | | trustworthiness by looking at the books and other |
| speakers, sound equipment, venue, advertising, | | | | things that such an organization must have. |
| gifts, decorations and other things that you will | | | | It would be a good idea to take half an hour to |
| think of, depending on the kind of event you are | | | | consult with an attorney about the whole |
| arranging. You also need to write down all your | | | | business. If you follow his advice, it will protect |
| income such as ticket sales, sponsorship, | | | | you from possible problems further down the |
| donations and the like. Add them all up and | | | | track. |
| subtract the expenses from the income. If there | | | | How Will You Thank Your Supporters? |
| is not much profit, then you may need to comb | | | | Once the fundraising even is over and has been |
| through it to see where you can cut costs. | | | | successful, then you will need to thank your |
| Remember that local people may be willing to | | | | supporters and this can be done in a variety of |
| donate their expertise or equipment for free to | | | | ways. Firstly, your supporters are not only those |
| help you cut costs. Even the cost of the venue | | | | who made donations, but those volunteers who |
| could be heavily discounted, if not free. If you | | | | spent so much time and effort in making the |
| don't ask, you'll never know, so don't be shy. Also | | | | event a success. They deserve recognition and |
| look at alternatives. If you were going for a full | | | | thanks just as much as the sponsors, because |
| band, try a DJ with sound equipment instead. | | | | without them the event would not even have |
| Change the menu to something a little simpler. | | | | happened. In fact, the volunteers have worked |
| Even if your event is something as simple as a | | | | harder than the sponsors, because all they had to |
| car wash, you still need to have a budget. It will | | | | do was write out the check. |
| be a much simpler budget of course, but you still | | | | To thank the volunteers, a barbecue may be |
| need to account for the cleaning products used, | | | | given especially for them. If it is a 'sausage sizzle' |
| don't you? | | | | you will only need the sausages, bread and sauce |
| If your event is a really big and complicated one, | | | | so it shouldn't be too expensive. This can be held |
| it may pay you to get special software to help | | | | after the event and can be by official invitation or |
| you create the budget. While you're at it, get one | | | | by word-of-mouth. Just be sure everyone knows |
| of those volunteers who has accountancy skills to | | | | about it, or bad feelings will be the result. If you |
| do it for you. Or if none of them have, go to | | | | don't want to organize a barbecue, then you could |
| your local accountant and ask if he would be | | | | thank the volunteers in a different way. A thank |
| willing to donate his time to do it. What a good | | | | you letter or card would be appreciated. |
| idea! | | | | To thank the supporters for their donations a |
| Legal and Tax Issues for Fundraising Activities | | | | letter of thanks is in order. But don't stop at the |
| In many states funds gained by fundraising are | | | | letter; they will like to know exactly how their |
| not taxable, but it sometimes depends on the | | | | money made a difference to the cause. If |
| organization. For instance, in Illinois, if your | | | | possible, let them see the real evidence by |
| organization were considered to be religious, | | | | sending a photo of the results. Whether it was |
| educational or charitable you would need to make | | | | computers for the school or rescuing abused |
| an application for exemption 'E' status. This would | | | | pets, it's not hard to take a photo. If you can also |
| entitle you to be exempt from incurring Use Tax | | | | show the students using the computers, or the |
| in some cases. | | | | rescued animal in its new home, it will add that |
| In some states, religious groups must collect tax | | | | personal touch. You may have to get parents' |
| on sales, but they may have one tax free sale | | | | permission for photos of students, though. |
| per year so long as they own what they sell and | | | | Of course, it may take a while to get these |
| are selling to members of the public. The sale | | | | photos and you don't want to leave it too long |
| must not last more than three consecutive days | | | | before sending that thank-you letter, so firstly, |
| and must be conducted by members of the | | | | send a preliminary letter of thanks along with a |
| organization. | | | | copy of your budget showing the profit and |
| In other states, any non-profit organization is | | | | itemize what the proceeds will be used for. Then |
| exempt from tax. If schools hold a book fair in | | | | later, when these goals have been accomplished, |
| conjunction with the publisher and get a | | | | send another letter of thanks with the results. |
| percentage of their profit for fundraising, they | | | | This can be up to several months later and will |
| don't have to pay tax on it, but the publisher | | | | serve to give your organization a high profile. |
| must pay tax on their portion. | | | | When you esteem and honor a company in this |
| For individuals who deicide to raise money for a | | | | personal way, and they can see how their |
| charitable cause, if you keep it under a few | | | | donation made a difference, they will be more |
| hundred dollars, then you can probably get away | | | | than willing to make further donations when the |
| without any legal work - except that you must | | | | time comes. However, it would be inappropriate |
| always keep a strict record of your budget and all | | | | to mention this possibility in your thank-you letter. |
| financial comings and goings. However, if you are | | | | |