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Acct 4650 Fundraising report - Fundraising for Non Profits...

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Unformatted text preview: Fundraising for Non- Profits ACCT 4650 (R10) Chuan Wei — 100110290 Eunji Lee - 100203963 Frank Wu — 100136714 Jeremy Yu - 100217938 Michelle Cho — 100191814 Philip Cheung - 100184546 Susan Robertson - 100121537 Contents Fundraising Overview .................................................................................................................................. ..2 Three Types of Donor Giving ....................................................................................................................... ..2 Annual Giving ...................................................................................................................................... ..2 Major Giving ........................................................................................................................................ ..3 Planned Giving ........................................................................................................... ............... ....3 Motivation for Giving ......................................................................... ............................................. ...... ..4 Fundraising Cycle ................ .... ........................................................................................................ ..5 Grants ........................ ............................................................................................................................... ..5 Foundation Grants ..................................... ....................................................................................... ..E Public Foundations ......... ................................................................................................................. ..6 Private Foundations ........................................................................................................................ Qualified Donees for Foundation Funds ............................................................................................. ..F Tips when Applying for Foundation Grants .................................................................................. Corporate Grants ...................................................................................... ............................................... ..? Government Grants ................................................................................................................ ................. ..8 Provincial Government ................................. ............................................ ........................... ..11 Federal Government ............................................................................ ...................................... ..11 Municipal Grants ................ ........................................... ..................................................... ..11 Developing a Proposal Idea ....................................... ........................................................................ ..12 Project Description ............................................................................................................................ ..12 Community Support ..... ...................................... ....................................... ....................... .... ..12 Locating Grantors .............................................................................................................................. ..13 Writing the Proposal .................................................................... ................................. ...................... ..13 The Concept Paper ....................................................................................... .................................. ..13 Proposal Contents .................................................................... ...................................................... ..14 The Government’s Revised Role in Financing Non-Profit Organizations ............. .................... ...... ..17 Pros and Cons .................................................................................................................................... ..1? The Initial Phase: Changes in Traditional Government Grants ......................................................... ..18 Bibliography .............................................................................................................................................. ..19 Fundraising Overview A survey taken by Statistics Canada in 2007 revealed that "almost 23 million Canadians — 84% of the population...made a financial donation to a charitable or other nonprofit organization" [Michael Hall). Individual, corporate, foundation and government giving is what makes up approximately 61% ofthe voluntary sector's revenue in 2003 (Planned Giving Solutions Inc., 2007). Fundraising is the act of raising funds with the goal of charitable or philanthropic giving. The different revenue sources come from individuals, corporations, foundations, and government. Fundraising is a crucial component for not for profit organizations (NPO) as some NPOS are totally reliant on fundraising to continue operating. Every NPO will have experience with this type of revenue stream. In this report, we will: a focus on how an organization can obtain gig-(grants - explore the different types ofgrants that are available to NPOs based on who awards the A ,/ grants look at how a Not for Profit can start the proposal process once they have found a 6(0 9 grant suitable to their organization I share our findings on how a Not for Profit can maintain any previously awarded grants in the future I summarize how the government has recently changed their way they plan to support charities and Not for Profits Three Types of Donor Giving \/ One way a nonprofit obtains revenues is through donations. There are three main categories which & its“ donor giving falls under: annual giving, major giving, and planned giving. {gt-P by; Annual Giving [)3ng K The most common type of donation is annual giving. Annual giving refers to the smallest type of _ 5(1) gifts with values usually less than $1,000. Because these gifts are fairly small and require little (901' g? decision making on the part ofthe donor, it is common for the donor to give on a regular basis. $1 Furthermore, the gifts usually come with no restrictions on how the funds are to be spent and can I; "a" 1 be raised in many different ways. Although annual giving has the highest number of donors, the é D ‘7 _ amount of revenue raised by these donors is smaller than major and planned giving. Product I. fundraising provides the donor with a good or service in exchange for money. Examples ofproduct 0ru%. fundraising are; bake sales, car washes, charity dinners, concerts, auctions, contests, sport tournaments , the list is practically endless. Sponsorship is when a person donates money when the person requesting has performed a specific activity as part ofa Not for Profit organization. Online fundraising is when the Not for Profit turns to the internet to produce money. Such ways include; Pay by Click, organizations will receive funds every time an ad is clicked on or an article is read or Donate now buttons on website or email campaigns. Grants can also be classified as annual giving but often comes with restrictions on how the funds can be spent. Grants are larger sums ofmoney distributed to the recipient from either a corporation, foundation or an individual. Major Giving A Not for Profit wants annual giving to become a habit ofthe donor where they will eventually upgrade their gift and move on to major giving. Major giving is defined differently by each organization; usually it is the top 10—20% of the donors who make up 70-80% of the gift income (Norris). These gifts can be cash but they can also be donated goods or services-which are In-Kind gifts. In order for major giving to occur, three factors must be present: 1. the donor has a stronger relationship with the organization 2. the donor has similar values with the organization 3. And, the donor has the financial ability to give big Planned Giving The largest stream ofincome for NPOs comes from Planned Giving. Planned giving is a deferred gift that is planned for in the present. This incorporates various types ofbequests, trusts, annuities and other commitments requiring legal documents (Alexander).This gift can be cash, equity or land. These gifts generally come with restrictions on how it should be used and they come from the smallest percentage ofthe donating population. The fundraising pyramid depicts the relations between the three types of giving below. Refer to Exhibit 1. Exhibit 1 Motivation for Giving There are different reasons that corporations, foundations, and individuals give. When fundraising, a Not for Profit should understand the different reasons for giving in order to increase their Chances of receiving donations. When a Not for Profit begins a search for corporate dollars they need to consider how there can be a mutual benefit to the Not for Profit welfare and the interests of the corporation. They will also need to understand a corporation’s business plans and goals and make sure they are in line with the corporation. Many corporations give frequently and have systems in place for giving. Sometimes, Corporations give cash products or services they have by specific foundations they have set up. For example, Home Depot has set up the Home Depot Canada Foundation which is aimed at using their skills, knowledge and resources to develop sustainable homes and communities for Canadians. This structure helps the corporation increase their Visibility in society and build partnerships that are mutually beneficial. Foundation giving occurs when a company sets up a structure to give for a specific cause or purpose. These companies are set up by corporations, individuals or families who have a special interest. For example, the Tiger Woods Foundation is set up with the purpose ofhelping kids go to college. Foundations have strict guidelines that need to be followed when giving. Some have restrictions which are geographical, tax based, or self imposed. Operating foundations only support their own programs and usually do not make contributions to other organizations. Individual donors are more complex with their motivations for giving. Some donors may donate in order to rid themselves of guilt. Some of the individuals give for the following reasons: - Devouts give because ofreligious beliefs. This is the most popular form of giving as in 2007 46% of all donated money was received by religious organizations (Hill) e Communitarians are motivated by the belief that giving makes good sense with business, society or are daily lives. - Investors are concerned with the tax and estate benefits of giving and are interested in what their support will result in. Studies suggest tax breaks do not influence many individuals on the amount ofmoney donated, unless tax rates influence how much an individual is able to give. For example, if you give $1000 and are taxed at 35% your out ofpocket money given is $650 as the $350 reduces your tax liability, ifyou are taxed at 10% your out ofpocket money given is $900 so you might give less ifyou are taxed less. t Socialites give because it provides them an opportunity for social interaction. I Altruists are selfless donors who give without any desire of recognition. - Re payers give based on the gratitude they receive. - Dynasts give because of a family tradition of giving. Fundraising Cycle The fundraising cycle is a continuous cycle aimed at generating and retaining funds from potential donors. The process may begin at any point of the life cycle and should be applied to all types of donors in identifying, obtaining and retaining grants. There are 6 key steps identifies in the cycle: 1. Identify prospects and research who they are and what they are interested in. At this point of the fundraising cycle, corporations, foundations or individuals are identified as potential donors. These prospects may be identifies through existing relationships, past history, current donors and employees. The degree of research on individuals, corporations, foundations or government will depend upon the type of giving pursued. 2. Cultivating the relationship involves contacting the potential donor on a regular basis in order to develop a relationship. Some of the ways in which to cultivate a relationship with a donor would be to invite them out to the organization and events to meet different types of people working for the NPO and benefiting from the programs offered. 3. Soliciting often involves personal solicitations such as a letters, grant proposals, phone calls and meetings. For major giving and planned giving, a nonprofit will already have a good idea if the solicit to the individual will be successful or not. A Not for Profit can also get professional help to develop media advertisings or mail campaigns. Membership fees raise funds and also track those who are interested in your organization. Other fundraising efforts are impersonal letters, e-mail, phone calls, grants and special events such as bake sales, charity balls, golf tournaments, or auctions. 4-. Thanking the donor upon receiving the gift means to acknowledge the contribution and express gratitude. The acknowledgement of a gift can range from a simple thank you letter to a more elaborate thank you- depending on the size of the gift and needs ofthe donor. In deciding how to acknowledge donations, it is important to remember that each donor requires different types of "thank you" arrangements. On the other hand, the donator will remember if they do not receive a thank you and this will impair your future donor capabilities. 5. Stewardship means to follow up with the donor in order to account for the funds received and explain how the money has been spent. Stewardship also ensures the donor that the money has been used within the terms agreed upon. It is important to continue communicating with donors in order to successfully nurturing relationships. The more connected a person or company is to a Not for Profit, the more likely they are going to continue supporting the organization. ‘1‘ a!) T/x—fl w . :1- rants 5 gal" Grants are a type offundraising that a non-profit can obtain revenues from. A grant is "a form ofgift / that entails certain obligations on the part of grantee and expectations on the part of the grantor" (Pynes, 2011). The process to apply for a grant is similar to apply for loans from the financial institution. However, grants do not require any repayment of principle or interest charges. A grant usually contains legal obligation and an agreement which is either presented in a written formal 5 agreement or an informal agreement. Failure to fulfill any obligations resulting from a grant is likely to produce legal litigations; especially for restricted government grants. Grants can be divided into conditional grants and unconditional grants. Conditional grant funds are restricted for a specific project or purpose and may not be used for any others; this type of grant is also called a restricted grant. Most grants provided by governments or large organizations are conditional; so the candidates must be qualified for all eligible requirements. Unconditional grants, also called unrestricted grants, can be used for any purposes that recipients see fit. In most situations, unrestricted funds are usually used for either general operations or events relevant to the organization's mission statement. Grants can be classified by its source into three main types: Foundation, Corporate, and Government. Foundation Grants . Foundations are a type of charitable organization with a principle purpose of distributing grants to .IL lettFElEltEfl organization, institutions, or individuals for scientific, educational, cultural, religious, or 1p L other charltable purposes. Foundations that give grants to support other charities are known as ELI-l7 grant maldng foundations. Approximately 3,000 grant making foundations in Canada distribute good over $1.5 billion every year to support the work of charities and nonprofit organizations. Canada l Revenue Agency regulations require that public foundations give 3.5% of its investment assets annually. Most grant making foundations have endowment and invest the funds to generate an annual income in order to make grants. There are two main types of grant making foundations: public foundations and private foundations. Public Foundations A public foundation is governed by a board with the majority of its directors at arm's length. It derives its support from various sources including other foundations, individuals and government agencies. Common examples of public foundations are hospital, university and community foundations. The main purpose ofa community foundation is to build community endowments that ensure vital futures for a particular geographic community. Donors may have control over the charities that will benefit from their fund, or they may contribute to the community foundation's general endowment fund. The Board of directors from the community foundation will decide how to spend the income from the endowment funds. Private Foundations I’rivate ioundations are controlled by a single donor or family through a board with the majority of directors at non—arm's length. Private foundations obtain their money from family members, individuals or corporaiions. Examples of private foundations are corporate foundations, donor advised funds and family foundations such as Ford Foundation. Corporate foundations [also known as company sponsored foundations] are separate legal entities that maintain close relationshipf with their parent company. They mainly rely on regular contrihutions from the parent company to support other charities or individuals. Qualified Donees for Foundation Funds According to Income Tax Act, a registered foundation can disburse grants of gifts only to qualified donees. Qualified donees are organizations that can issue official donation receipts for gifts that foundations make to them including: a Registered charities - Registered Canadian amateur athletic associations - Registered national arts service organizations - Housing corporations resident in Canada constituted exclusively to provide low- cost housing for the elderly a The United Nations and its agencies I Universities outside Canada listed in schedule Vlll ofthe Income Tax Act Regulations o Charities outside Canada to which Her Majesty in right of Canada (the Federal Government) has made a gift during the last 12 months - Municipalities in Canada o The Federal Government, Provincial Government, or their agents Tips when Applying for Foundation Grants Reading the goals of a foundation and researching its previous awards are always good starting points for a NPO to get a sense of whether sending a proposal to the foundations is likely to elicit a positive response. Most foundations offer information about foundation grants on their website with application forms. A nonprofit seeking a foundation grant should consider how well the goals of the foundation match with the organization and the proposed project. A foundation’s activity generally reflects the interest of the founders. Therefore, big differences in political or social ideals can provide adequate means for rejection. For example, a Catholic foundation is not likely to support an effort to expand birth control services to a high school population. Foundations often ask nonprofits to demonstrate the potential outcomes or benefits arise from t ieir grants. It is important to show not only the direct benefit to their organization, but also the ositive impact to the community as a whole. Many foundations give grants to NPOs based on personal relationship. Therefore, building a good r...
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