Nonprofit & Government Times Q1 2020

It’s important not to lose sight of potential tax consequences of these types of income streams.

Board members will be able to fully support it with a clear understanding. More importantly, they’ll also be able to communicate that mission to others, including potential donors. This will enable them to grow their donor base with people who believe in their mission and trust the organization.

Many corporate entities happily engage in various volunteering activities or raise funds for various charities. Nonprofit organizations should consult with their tax advisors to ensure that any contracts for this type of fundraising are structured to avoid generating taxable income.



In today’s world, nonprofits are shortsighted if they don’t sufficiently invest in an online presence. What we are hearing from many is that their staff is too busy and they don’t have funds for a dedicated person to handle their digital activities. However, the cost is relatively small compared with the potential impact. A post on social media can show the great things the organization does in real time and also raise funds more quickly by including a donation link in the post. Although these online donations might not be large, they can add up quickly. A strong online presence can also raise aware- ness of the nonprofit’s mission among potential donors, providing an easy way to broadcast the message and engage more individuals and companies. CAUSE-RELATED MARKETING Another way to raise additional funds is through cause-related marketing such as AmazonSmile, which donates 0.5% of the purchase price of eligible prod- ucts to charitable organizations. Nonprofit organiza- tions can easily register on to receive AmazonSmile donations. They can also partner with local stores or for-profit businesses that donate part of their proceeds or solicit on the organization’s behalf.

Another source of additional funds that is growing in popularity is the Donor Advised Fund (DAF). A DAF is a giving vehicle established at a public charity that allows donors to make a charitable contribution, receive an immediate tax deduction and recommend grants from the fund over time. Donors can contribute to the fund as frequently as they like and recommend grants to their favorite charities whenever they like. This type of fundraising has spiked with the Tax Act Reform of 2017, which increased the standard deduc- tion and provided an incentive for donors to make deductions once every two years in order to save tax dollars. Over the past few years, some donors have chosen to create DAFs instead of private foundations. Nonprofit organizations should also consider them in their solicitation plans. One of the simplest ways to do this is to include language on the organization’s website stating that the organization accepts dona- tions from DAFs. In addition, unlike private foundations, pledges can be satisfied with monies from DAFs. 1 This could be a great option when donors don’t want to spend additional cash but have funds available in their DAFs. Since there FIRST QUARTER, 2020 Nonprofit & Government Times 4

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