Second edition, Openness and Disclosure in Fundraising

Transcription

1 Second edition, 2014 Openness and Disclosure in Fundraising

2 Georgeann R. Luxion Luxion Consulting Certified in Nonprofit Board Education By Board Source Licensed Consultant for the Standards for Excellence

3 Standards for Excellence An Organizational Tool A model for nonprofit organizations to implement accountability in their management and governance practices A framework with a clear statement of the organization s commitment to best practices A self-regulatory tool to ensure public confidence and public support A demonstration of the organization's commitment to public service

4 Standards for Excellence What are they? 6 Guiding Principles, 27 areas of focus and 67 Benchmarks Preamble Mission, Strategy and Evaluation Leadership: Board, Staff and Volunteers Legal Compliance and Ethics Finance and Operations Resource Development Public Awareness, Engagement, and Advocacy

5 Why Care about Ethics and Accountability? Public Opinion Easily swayed / high expectations Limited confidence Looking for easy answers Competition in the Nonprofit Sector How do you set yourself apart? Federal and State Regulatory Scrutiny Nonprofits must demonstrate the ability to self regulate

6 Nonprofits Depend upon the Public and the Public Trust Tax exemption Tax deductible dollars through contributions Recipients of foundation grants Ability to recruit volunteers, including board members Public trust is an important asset

7 Openness What information should we communicate to the public? How can the public communicate with us? What do we legally have to provide to the public?

8 Openness Annual Reports Public Access

9 OPENNESS Annual Report Basic Elements A. Mission statement B. Program narrative C. Basic financial information D. Board of directors Content trumps appearance! E. Management staff

10 Small Group Activity Review annual reports and discuss whether they meet the requirements indicated in the Standards Basic Elements A. Mission statement B. Program narrative C. Basic financial information D. Board of directors E. Management staff

11 OPENNESS Public Access Communicating with the public What do you do if someone shows up at the door asking for a copy of your financials? IRS Form 990, 3 yrs. Form 1023 Determination letter

12 How can you avoid this scenario? In a June 2010 Chicago Tribune article, No Lack of Charities but Lack of Information, When the Tribune asked Lovie Smith [former head coach of the Chicago Bears] for copies of the returns, he initially declined to provide them. Informed they were public documents, Smith said: "If there's something public that you want to get, you're welcome to get it but I'm going to keep as much private as I can."

13 Resource Development Solicitation Material and Receipts should: Identify the organization Identify the mission Identify the intended use of funds Be accurate and truthful Include all required disclosure statements (State and IRS)

14 Disclosure Requirements Proper registration for soliciting contributions; Disclosure requirements in fundraising solicitations; Disclosure requirements regarding the deductibility of your donors contributions; Disclosure requirements in fundraising receipts and acknowledgments; Disclosure requirements regarding financial documents that must be provided to a member of the public upon request; and Detailed disclosure requirements for contests, sweepstakes and promotions.

15 State Registration under Applicable State Laws Does your organization need to register in other states where your donors reside? Yes in many but not all states Based on how many donors, how you solicit, how much you raise All states have different rules many discount online donations

16 State Registration under Applicable State Laws Uniform Registration Statement Charleston Principle Resources 50 States Fundraising Guide National Association of State Charity Officials Secretary of State websites Attorney General websites Hire someone to take care of all the registrations

17 Disclosure Requirement for Solicitations Newsletters Brochures/ Flyers Direct Mail s Newspaper Advertisements Event Invitations Gift Receipts and Thank You Letters Annual Report Website

18 IRS Disclosure Requirement for Solicitations You should tell donors: Organization is recognized as tax exempt under the section 501(c)(3) of the Internal Revenue Code. Donations to nonprofits with 501(c)(3) tax exempt status are tax deductible as charitable contribution. Example Statement ABC Nonprofit is a 501(c)(3) nonprofit organization donations to which are tax deductible to the fullest extent allowed by law.

19 State Disclosure Requirement for Solicitations Some states require: Special disclosure statement availability of current financial statements registration does not equal endorsement Many states have created their own requirement for disclosure language Florida: A copy of the official registration and financial information may be obtained from the division of consumer services by calling, tall-free within the state 800-HELP-FLA within the state. Registration does not imply endorsement, approval, or recommendation by the state. Florida Registration #

20 Peer to Peer Exchange In small groups, each participant shares his/her organization s fundraising solicitations and receipts. Review to see if they meet the standards: Identify the organization Identify the mission Identify the intended use of funds Include all required disclosure statements (State and IRS)

21 Acknowledging Donor Contributions IRS presumes that donations are not taxdeductible!!! All cash donations require documentation In-kind Goods and Services Payroll Deductions

22 Deductibility of Donor Contributions Dear Donor only a portion of your gift is tax deductible (only for contributions over $75) Determining Fair Market Value Raffles, Auctions and Membership Benefits Contests, Sweepstakes and Promotions Stiff Penalties - $10 per contribution up to $5,000 per event

23 Your Next Steps How will you proceed in your own organization?

24 Questions and Answers Please complete the evaluation forms on the table.

25 Georgeann R. Luxion Luxion Consulting Certified in Nonprofit Board Education By Board Source Licensed Consultant for the Standards for Excellence