| This is part 5 of How to Run a Fund Raising | | | | you may be wise to set up a charitable organization |
| Campaign. Eveyrthing you need to know about running | | | | that will be exempt from taxes under the IRS Section |
| a fund raiser. | | | | 501 (c) (3). |
| How to Create a Budget for Your Fundraising Event | | | | The reason for this is that whatever money you get is |
| The necessity of creating a budget for your | | | | considered part of your income and you have to pay |
| fundraising even cannot be stressed enough. It is | | | | tax on it yourself, even though you are not going to |
| imperative to know how much everything is going to | | | | keep it. The IRS will want to know exactly how much |
| cost so that you will know what to charge and so | | | | you made and where it came from and what you did |
| make a profit. Not only that, but records of all monies | | | | with it. If you can't answer them, they will - to put it |
| received must be kept properly so that no one can be | | | | mildly - be annoyed. And you will be in hot water. |
| accused of doing the wrong thing with the funds. Once | | | | Another reason is that at least some people - and |
| any hint of wrongdoing taints your cause, your | | | | maybe most - will want a receipt so they can write |
| sponsors will drop you like a hot cake. | | | | that donation off on their tax. If you give them a |
| So how do you create a budget? You must get | | | | personal receipt it cannot be legally used for that |
| quotes for all your costs. Every single thing that is | | | | purpose. They will want to know how their money is |
| going to cost any money must be written down. It may | | | | going to be spent and you are accountable to them |
| be that you can find a cheaper alternative or get | | | | for it. If you have an organization, they will be able to |
| something donated that you thought you'd have to pay | | | | verify your trustworthiness by looking at the books |
| for, but it all has to be down there in black and white. | | | | and other things that such an organization must have. |
| You may need to pay for entertainment, catering, | | | | It would be a good idea to take half an hour to consult |
| speakers, sound equipment, venue, advertising, gifts, | | | | with an attorney about the whole business. If you |
| decorations and other things that you will think of, | | | | follow his advice, it will protect you from possible |
| depending on the kind of event you are arranging. You | | | | problems further down the track. |
| also need to write down all your income such as ticket | | | | How Will You Thank Your Supporters? |
| sales, sponsorship, donations and the like. Add them all | | | | Once the fundraising even is over and has been |
| up and subtract the expenses from the income. If | | | | successful, then you will need to thank your supporters |
| there is not much profit, then you may need to comb | | | | and this can be done in a variety of ways. Firstly, your |
| through it to see where you can cut costs. | | | | supporters are not only those who made donations, |
| Remember that local people may be willing to donate | | | | but those volunteers who spent so much time and |
| their expertise or equipment for free to help you cut | | | | effort in making the event a success. They deserve |
| costs. Even the cost of the venue could be heavily | | | | recognition and thanks just as much as the sponsors, |
| discounted, if not free. If you don't ask, you'll never | | | | because without them the event would not even have |
| know, so don't be shy. Also look at alternatives. If you | | | | happened. In fact, the volunteers have worked harder |
| were going for a full band, try a DJ with sound | | | | than the sponsors, because all they had to do was |
| equipment instead. Change the menu to something a | | | | write out the check. |
| little simpler. | | | | To thank the volunteers, a barbecue may be given |
| Even if your event is something as simple as a car | | | | especially for them. If it is a 'sausage sizzle' you will |
| wash, you still need to have a budget. It will be a much | | | | only need the sausages, bread and sauce so it |
| simpler budget of course, but you still need to account | | | | shouldn't be too expensive. This can be held after the |
| for the cleaning products used, don't you? | | | | event and can be by official invitation or by |
| If your event is a really big and complicated one, it may | | | | word-of-mouth. Just be sure everyone knows about it, |
| pay you to get special software to help you create | | | | or bad feelings will be the result. If you don't want to |
| the budget. While you're at it, get one of those | | | | organize a barbecue, then you could thank the |
| volunteers who has accountancy skills to do it for you. | | | | volunteers in a different way. A thank you letter or |
| Or if none of them have, go to your local accountant | | | | card would be appreciated. |
| and ask if he would be willing to donate his time to do | | | | To thank the supporters for their donations a letter of |
| it. What a good idea! | | | | thanks is in order. But don't stop at the letter; they will |
| Legal and Tax Issues for Fundraising Activities | | | | like to know exactly how their money made a |
| In many states funds gained by fundraising are not | | | | difference to the cause. If possible, let them see the |
| taxable, but it sometimes depends on the organization. | | | | real evidence by sending a photo of the results. |
| For instance, in Illinois, if your organization were | | | | Whether it was computers for the school or rescuing |
| considered to be religious, educational or charitable you | | | | abused pets, it's not hard to take a photo. If you can |
| would need to make an application for exemption 'E' | | | | also show the students using the computers, or the |
| status. This would entitle you to be exempt from | | | | rescued animal in its new home, it will add that personal |
| incurring Use Tax in some cases. | | | | touch. You may have to get parents' permission for |
| In some states, religious groups must collect tax on | | | | photos of students, though. |
| sales, but they may have one tax free sale per year | | | | Of course, it may take a while to get these photos |
| so long as they own what they sell and are selling to | | | | and you don't want to leave it too long before sending |
| members of the public. The sale must not last more | | | | that thank-you letter, so firstly, send a preliminary letter |
| than three consecutive days and must be conducted | | | | of thanks along with a copy of your budget showing |
| by members of the organization. | | | | the profit and itemize what the proceeds will be used |
| In other states, any non-profit organization is exempt | | | | for. Then later, when these goals have been |
| from tax. If schools hold a book fair in conjunction with | | | | accomplished, send another letter of thanks with the |
| the publisher and get a percentage of their profit for | | | | results. This can be up to several months later and will |
| fundraising, they don't have to pay tax on it, but the | | | | serve to give your organization a high profile. |
| publisher 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 donation |
| charitable cause, if you keep it under a few hundred | | | | made a difference, they will be more than willing to |
| dollars, then you can probably get away without any | | | | make further donations when the time comes. |
| legal work - except that you must always keep a | | | | However, it would be inappropriate to mention this |
| strict record of your budget and all financial comings | | | | possibility in your thank-you letter. |
| and goings. However, if you are thinking in bigger terms, | | | | More to come in Part 6... |