Just below this graphic showing you what this form looks like is a link for you to download the form in Excel to modify.
December 15, 20XX
Favorite Charity, Inc.
8000 Main Street
Anywhere, USA 99999
1234 Spruce St.
Anywhere, USA 99999
Thank you for your generous donation of two new hand-made twin bed quilts for sale at our upcoming auction. We did not provide any goods or services in exchange for this contribution.
Favorite Charity, Inc. is recognized as a tax-exempt public charity under Section 501(c) (3) of the internal Revenue Code. Contributions are deductible to the extent allowed by law.
a) Financial information about this organization and a copy of its license are available from the State Solicitation Licensing Branch at 000) 000-0000. The license is not an endorsement by the State. [Note: state laws vary related to such licenses.]
b) Favorite Charity, Inc. is a [California or Nebraska etc.] nonprofit, IRS registration number ___________. Financial and program organization can be found at www.favoritecharityinc.org or at www.guidestar.org.
Calculating overhead rates and managing overhead expense are important staff roles. Board members are not required to know how do staff accounting work, but we do need to bring an informed perspective to our oversight:
Harvard's indirect cost rate is 68% while Iowa State's is 48%. Should the board members of either institution be concerned? As a alumnus of one or the other, should these numbers affect our donations? As a parent of a high school senior, do these numbers influence where we want our child to go? Should they?
Amid the crosstalk about nonprofit overhead, board members and staff do need to understand what the conversation is really about, and how to interpret "what is overhead" for your own organization. Here are eight key things to know about overhead:
1. Apples, oranges, and alligators: One of the more surprising facts about overhead is that while it seems that everyone is talking about it, everyone is actually talking about the different things. The word "overhead" isn't an accounting term, so different people define it differently.
Some accounting terms which are similar to "overhead" and often confused with it are:
In one study, respondents were asked which of the above was the closest synonym . . .
Auctions are known for two characteristics: they raise money (sometimes a lot), and they are a ton of work. Blue Avocado contributor and CPA Dennis Walsh gives us a complete, handy compliance guide, and even better: five sample forms to make sure your wording is right:
Charitable auctions have stood the test of time as a great way to leverage our consumption-oriented culture for the benefit of nonprofit efforts. And while auctions have been traditionally held at special events, online auctions have recently increased in popularity, making it easier for volunteers and allowing people to bid from their homes and over an extended period of time.
But whether an auction is live, silent, or online, there are compliance issues. This article presents an overview of key charitable auction compliance issues and how to use donor education as part of compliance. With this background, and the sample worksheets and forms included, you can more easily meet reporting responsibilities . . .
Fundraisers never lack for advice. One board member tells you that foundations should be giving you money, while another thinks we should talk to Bill Gates. The staff thinks you should raising money from corporations. And the friend you run into at the grocery store tells you to raise money via Twitter or on Kickstarter.
The reality is that the board members should be raising money from foundations and major donors. The staff and the executive director should be raising money from corporations. The friend should be raising money for you on Twitter and Kickstarter.
So actually, fundraising isn't about you raising money, it's about all of them raising money. And your job isn't about so much for you to raise money; your job is about getting all of them to raise money.
And right there is the link between fundraising and leadership.
In fact, fundraising has more in common with volunteer management and community organizing than it does with technical knowledge about prospect research or grantwriting skills. Let's start calling fundraisers what they are: organizational leaders and movement builders. And fundraisers: let's start acting like what we really are!
* Are you an executive who followed a founder or longtime executive director with a compelling story to tell? Much of the literature on nonprofit executive transition has focused on the departing executive director. What about the trials, tribulations and triumphs of the person who comes next? We want to interview you for a First Person Nonprofit article; you can choose whether to use your name or stay anonymous. Please send an email and include your contact information and time zone!
* Discounts and free stuff for the next Blue Avocado Bonus Issue: Got a truly unusual and nationally accesible opportunity our 64,000 readers would love? Let us know! Email Susan Sanow susan at blueavocado dot org.
* In this issue: Ten Things Your Board Is Doing Right And Doesn't Even Realize It, Fundraising in Communities of Color, a quick DIY project with bylaws, and a guest humor columnist about a board comprised of cows (yes, cows). And news from our sponsor, American Nonprofits. -- Jan Masaoka and the Blue Avocado team
Almost all research on fundraising is done on mainstream nonprofits, and almost all advice and guides on fundraising are addressed implicitly to mainstream nonprofits. Yet because they have different development trajectories, nonprofits in communities of color often have fundamentally different assets and deficits than mainstream organizations of the same size and age.
For instance, imagine two afterschool tutoring programs, each 15 years old, and each with a budget of $600,000. The mainstream program is likely to have been founded by a group of prominent volunteers, mostly white, mostly upper middle income. Today it gets about 70% of its funding from foundations and 30% from individual donors. From its base of founding volutneer donors, the organization had strong writing skills and connections that positioned them for both grantwriting and fundraising events.
In contrast, a parallel tutoring program in an African American or Latino community, for example, is likely to have been founded by a group of community activists, mostly African American or Latino, mostly middle and lower-middle income. With the same budget as the mainstream program, this program gets 95% of its funding from local government, 4% from fundraising events, and 1% from foundations. Its founders had the political connections and savvy to obtain government funding and as an anchor organization in a low-income community, their continued involvement with broader community affairs continues to support their funding strategy as well.
Conventional fundraising advice --
This survey of 906 nonprofit finance professionals reveals some surprises about these crucial-but-often-overlooked staff, looking at questions ranging from educational backgrounds, workload, board and CEO understanding of finance, and CEO compensation:
Nonprofit finance scandals make for eye-catching headlines: whether about misused public funds, egregiously high salaries, constituents not served, or reserves squandered. But while nonprofit finance scandals make the headlines, the people who manage the funds -- nonprofit finance professionals -- are largely overlooked. And while studies have looked at the tenures and experiences of executive directors (CEOs) and development directors, few have looked at the finance professionals in our nonprofits.
Despite the occasional and highly-publicized problem, the very fact that such problems make the news testifies to the infrequency of such occurrences. Nonprofits are relatively free of financial scandal and abuse, demonstrating both professional expertise and a strong sense of values. But today even the best-managed nonprofits are working not only to steward charitable funds, but to manage earned-income operations, to re-invent their business models, to strengthen the leadership functions of governance, and to maximize the use of funds for mission and values.
Finance professionals are at the core of these efforts.
This study was conducted . . .
In Part I of this two-part article, we summarized the features and criteria of six of the best known "charity raters" including Charity Navigator, Better Business Bureau, and others. Many readers added thoughtful comments and noted lesser-known raters as well; we encourage you to read Part I and the posted comments.
Here in Part II, we offer advice to nonprofits on managing their ratings, and comment on the impact of the raters as a whole.
Just two weeks after we published Part I, an unusual three-some of Guidestar, Charity Navigator and the Better Business Bureau issued an unexpected but welcome joint statement " denouncing the "overhead ratio" as the sole measure of nonprofit performance." (emphasis added) (overheadmyth.com) The statement also defends overhead to an extent: "Overhead costs include important investments charities make to improve their work: investments in training, planning, evaluation, and internal systems -- as well as their efforts to raise money so they can operate their programs. When we focus solely or predominantly on overhead . . .
In this article, Steve Zimmerman continues presentation of the Matrix Map model from the book Nonprofit Sustainability: Making Strategic Decisions for Financial Viability.
In our last Blue Avocado column, we introduced the Matrix Map, which you can use to create a visual representation of your organization's business model. Comprised of all your organization's business lines (activities), the Matrix Map illustrates how your activities work together towards both programmatic impact and financial viability. For many board members, the Matrix Map provides sudden clarity on how the organization's different activities inter-relate. But beyond helping them understand the business model, the Matrix Map can help nonprofit leaders strengthen it.
You'll recall that putting together a Matrix Map calls for plotting your organization's business lines according to their mission impact and financial profitability. Depending on where an activity is placed on the map, a strategic imperative emerges. These strategic imperatives are the actions . . .
American Nonprofits and Blue Avocado want to learn more about the backgrounds, experiences, joys and frustrations of being in nonprofit finance. If you have responsibilities for the accounting and finance of a nonprofit -- regardless of your position -- please take a few minutes and help with this survey.