Nonprofit Fundraising: Answering Viewer Questions & Comments

There is so much that goes into non-profit  fundraising that sometimes it can feel like no matter how much you learn there's still so  many nuances and so many questions left to answer! So in this video I'm going to talk  through six answers to questions that you all viewers asked about non-profit fundraising welcome or welcome back to my channel my name is  Amber Melanie Smith and I am a non-profit founder and executive director. I make these videos here  on YouTube to help people like you who

want to make an impact whether that's through starting  a non-profit or helping out causes that you care about social enterprise and more i hope as always  that you find this video helpful don't forget to give it a like and subscribe to my channel for  more content like this i also have a website foundertofulltime.com where I offer some trainings  and resources for people starting a non-profit or developing their fundraising plan so my hope  with this video specifically is that it will shed a li

ght on some of those nuances that i referenced  earlier to non-profit fundraising and that even though a handful of you asked these questions  i picked these questions in particular because i bet many more people have the same question and  you're asking it and the answers that we're going to talk through today will hopefully help all of  those people too and some of these questions are are really great and kind of specific and  not things that people might think to ask so i'm really excited and

let's get in  here let's dig into these questions here all right so this first question is from username  and hopefully i'm pronouncing this right aya oba they said hi amber can i start a crowd fundraising  campaign before getting tax exempt status so this is a really great question and something  that i hear a lot from people who are in that startup phase maybe it's before they  filed their official paperwork to get that 501c3 or tax exempt status in the united states in  particular and when y

ou are going about starting a non-profit you quickly realize that there are some  things that are going to cost money that you just can't get around for example there's a filing  fee for the federal government usually for your state as well in order to get those articles of  incorporation in if that's the right you're going um so even if you do all of it yourself  they're inevitably going to be some things that cost money so if you don't already  have that money you have to go get that money som

ehow right you have a lot of different options  in this particular case they're asking can you do crowdfunding which means can you ask for little  bits of money from the public to contribute to the grand total of what you need in order to get  started and the answer is yes but there's a little bit of nuance to it again that you really need  to be aware of and that is that money that you raise before you get at the very least before  you get your articles of incorporation before you get your inco

rporated status in your state as  a non-profit assuming you're in the united states money that you raise could possibly be interpreted  by the irs as personal income for which you might need to pay taxes so what i recommend is me not  being an accountant or a lawyer i recommend that you talk to one and just get their take on it  and share your plans before you undertake any um significant fundraising for a startup  nonprofit before you get that tax-exempt status now if you get incorporated in yo

ur state assuming  again we're talking about the united states if you go ahead and do that first level of incorporation  as a nonprofit in your state and then you go on to raise money for the next phase of starting a  nonprofit which is filing the federal paperwork to get that official tax exempt status then  the money you raise between being incorporated and getting that official tax-exempt status could  possibly be retroactively considered tax exempt so more nuance there talk to your lawyer  a

ccountant question number two is from a user susie g and it's kind of related to that first  question but it's a little bit more specific so susie's question is hi starting a non-profit with  some crowd funding so similar situation love your content thank you thank you susie can i put on  my website that i am applying for 501c3 status and what would the wording be this is a really  good question and it's all about transparency so yes you could put on your website that you are in  the process of

applying for your 501c3 tax-exempt status as a non-profit if that is in fact true  and you're making that statement in good faith but i want to be clear that just because you say  that on your website does not mean that donations made before you get your 501c3 status are tax  exempt so you do need to have on your website if you're going to be putting that you're in  the process of applying for that status at all you also need to add that donations are not  tax exempt until you get that status so

i know that sounds a little scary and like you're  concerned that maybe people won't donate if you remind them that their donations are not going to  be tax exempt but i have some good news for you and that is that in my experience people  rarely make a donation because of a tax exempt status when people donate it's because  they either have a personal connection to you or a personal connection to your cause um  they're they're not going to be like oh well it's not tax exempt well i no longer c

are  that is highly unlikely so i say go ahead be transparent put that information up there if you'd  like to but make sure that you know donors and potential donors have that information up front  so that you can follow the law and be creating an authentic honest experience with those first  owners question number three is from cindy t and they ask how can you do fundraising  in places or to people you don't know cindy and anyone else who might be thinking about  this question that is a really

good question and i have done some other videos about the process  of starting to get donors starting to build up a donor base so i definitely recommend that you  check those out in my fundraising playlist or across my channel if you haven't already but the  summary of the answer that you're looking for is that it is hard to raise money from complete  strangers so there is going to be a period of time before you can probably actually receive  money from donors where you're going to need to take

some time to build relationships  and raise awareness about your organization there's a couple of different aspects to this the  first is you've got to have that awareness piece first people can't donate to your cause if they  don't know it exists so you have to spend some time getting outreach out on social media going  to events talking to people seeing if you can get some speaking engagements with groups just  getting your name out there as an organization and making sure that you're giving p

eople an  opportunity to opt in by giving you their email address or other contact information to keep  getting more communication from you about the cause this is called donor cultivation and you  have to do this step before you can expect to get donations are there some situations where  you might have your organization in a big news story and then have some donations come in that  way yes it is possible but these situations in my experience are pretty rare and depend on some  pretty big thing

s happening out there in the world that would be drawing a lot of public attention  to your specific issue area at the moment your media story hits a classic example of this is  natural disasters you know people are watching the the horrible footage on the news of all the  suffering and everything going on and then the news links to your organization people have that  emotional immediate urgent response to get relief for that suffering now and donations might be made  even if they've never heard

of your organization before but as i mentioned because most non-profits  are not operating in that sort of natural disaster schema um you're going to be needing to take  some time to build up your audience building a relationship building trust with them before  you can ask them for money and then when you do a certain portion of the audience they build up  might donate question number four is from user named Maavi and it's kind of similar to question  number three and it reminds me a bit of it

in spirit and the question is well it's more like a  statement but no one is interested in my campaign i don't know why i can't do it alone without  the support of others what should i do this is tough and i feel for you because i've been  there so many times but i think that the answer goes back to what i was saying for question  number three and that is that it it would be very difficult you would have to be very lucky  in my opinion to just put a fundraising campaign or a crowdfunding campai

gn out there into the  world without having a significant audience first and a marketing strategy first people  are unlikely to just stumble upon your website or campaign and even if they do if they don't  have that like i said connection to your cause they're probably unlikely to be compelled to  make a donation and i think it's important to not take it personally think of it as the same  as sales or buying things you're exposed to dozens or hundreds or thousands of products and  services every

month but you don't buy them all you only buy some of them and you're more likely  to buy them when you've had more exposure to them you trust them as a brand and you have a personal  connection to them so without having more details about the specific campaign referenced in this  comment my guess is that a campaign may have been launched without that base first and then that's  something that you need to pause and and focus on building up that audience before you launch your  campaign again or

launch it at all now in the event that you do have an audience and something  is still not sticking there are a couple of things you can troubleshoot to look through your  campaign and think about why there might not be uh actions taken a couple of thoughts are you've  got to have a compelling story so focus on the story of one or a handful of people or or if  you serve animals animals that your organization serves tell their story help build that empathy  and connection and then make sure it's

clear how your organization is improving their lives  so that story piece is really really important if you only include data in your fundraising  ask for example a statistic like a thousand animals are suffering today something like that  people's brains tend to shut off because it's a little bit abstract but if you include the story  with it that'll help a lot and then the second thing i would recommend is to make sure that  you have a very very very clear and visible call to action i've seen

presentations and speeches  given where someone makes this incredible pitch and story but then they forget to make the ask at  the end they go through all that trouble and then at the end they forget to tell the audience what  they want them to do about what they just heard so make sure at the end of your communication or  website or whatever that you have a very large button that says what you want them to do donate  here sign up to volunteer whatever it may be and you explain that taking that

action is going  to help address the problem that you described earlier in the communication question number five  all right this one is from leia hey leah i hope i'm pronouncing that right um leia says uh another  fantastic video that popped up just as i needed it thanks for your kind words um someone told me that  we might be asked how much money we've already raised and i assume this is within the context  of a fundraising campaign that you're doing is this a question i should expect also me

ntioned  that people will ask if the board are also donors that foundations want to see a hundred percent  contributions by board members what is your experience with this okay so this is kind of a  two-part question i'm gonna get into this first part and the question as i understand it is if you  are in the process of doing a fundraising campaign do people want to see how much you've already  raised and i think that the answer is yes and i also want to uh clarify that we might be  talking about

a couple different types of donors or funders here if you're talking about a grant  foundation grants definitely love to see how much you've already raised or how much you think you're  going to be able to raise from other sources who are not them and the reason for that is they don't  necessarily want to make a grant to a project or an organization that has no other support anywhere  else they want to see community investment in your project in order to uh equip them to say yes to  your grant

request request as well now if you're talking about individual donors asking whether uh  or how much you have raised during your campaign as well i also think the answer is yes there  and i think that there's merit to offering up that information even if people are not asking  for it explicitly and here is why there is some great donor psychology research that shows that  people are much more likely to make a donation if they see that you are relatively close to  meeting your ultimate goal so th

ink of those pages you'll see with a thermometer on it  or some kind of scale where you see you know this much raised or this much is filled in on the  thermometer people are much more likely to donate when there's at least some of that already  filled in i think it's the same reason grant people uh might do it you know it's because they  want to see other people have invested as well but when you're talking about individuals  there's also an element of what's called social proof there and socia

l proof is when people are  more likely to trust something when they see that several others have gotten on board so to speak to  so the answer in summary is yes you might expect that question but also it's a good idea to just  offer up that information if possible too now that second part of your question was do people expect  or i guess in this case do funders expect to see a hundred percent board giving during a campaign yes  the answer is yes again and i think that similarly relates to the f

irst part of the question  you in general ideally want to see a hundred percent of your board members giving something  to the organization each year and something to each campaign even if it's a dollar even if it's  some small amount because we know you know board members are going to be in varying places in  their income and um it's important to you know be inclusive and make sure their board leadership  is accessible for everyone despite income level so being able to give 100 demonstrates to

your  donors and to funders that your leadership is invested and it's this whole question of well  why should i donate to your cause if you aren't even donating or your leadership isn't even  donating to your cause so i hope that helps the sixth and final question that i'm going to  talk through today is from diane w diane asks can a non-profit sell t-shirts with the name of  the non-profit on it as a fundraiser so diane and others asking themselves this question the answer  is simply yes but ag

ain there's a little bit of nuance here and here is what it is so nonprofits  can sell goods and merchandise and even services as income streams as revenue streams this is  called earned income however if the act of selling those things does not align with and further  i think that's the important distinction it does not further the organization's  actual public serving social mission then in that case the irs might stick you  with what's called unrelated business income taxes or penalties i tal

k extensively about  earned income and this unrelated business income penalty thing in some of my other videos about  earned income so definitely go check those out but basically what it is is the irs has in the united  states has granted your organization a special classification as a tax exempt organization and  the thing that comes along with that privilege is the tax exempt status for donations of  course but what the irs doesn't want you to do is compete with businesses so it is saying  tha

t you can raise money in a variety of ways as long as the way you raise money uh  is directly tied to furthering your mission and it's not doing something that  might compete with a business this is kind of hard to wrap your brain around so  let me give a few examples so let's talk about the girl scouts okay we know the famous girl scout  fundraiser is having girl scouts go out and sell girl scout cookies we all know them we all love  them it's wonderful now a part of the girl scout mission its

charitable mission is to help girls  develop entrepreneurial skills okay this is key so if the girl scouts are selling  cookies the argument the girl scouts is making is that through the act of  selling cookies these girls are learning entrepreneurial skills even though cookies as an  item have nothing to do with the mission now let's say an animal related organization wanted to sell  cookies as its fundraiser that would not qualify that would possibly be slapped with ubi or  unrelated business

income penalties because nothing about the animal organization's charitable  mission is furthered through the act of selling cookies i hope that this helps you wrap your  brains around this just a little bit definitely do some further research because earned income can  be quite a wonderful way to generate revenue for a non-profit organization but you do have to follow  some rules and you do have to do it correctly so back to diane's question could you sell t-shirts  yes you could but if you rai

sed a lot of money like over a certain threshold or percent of your  annual budget through these t-shirts you might get charged these unrelated business income taxes i  also want to say some organizations just say you know what i don't care give me those taxes and  they do it anyway so you can make that decision but you do have to as an organization be getting a  certain amount of your revenue from public support or you might have your 501c3 status taken  from you now let's say diane's t-shirts

had messages about mental health on them and  her organization um its mission was to raise awareness about mental health i could  maybe see an argument there that then the sale of the t-shirts which  have these messages on them is raising awareness about mental health i could  maybe see that so once again this is a situation where if you're not sure talk to your accountant  slash lawyer all right those are the six i'm gonna cover today i'd love to hear what did you think  did you like this forma

t um do you have more questions you'd like me to answer in future videos  definitely share in the comments below and um you know did maybe some of the questions you already  had on your mind did they get answered today let me know in the comments as i mentioned before  if you are starting a non-profit or developing a sustainable fundraising plan check out my  resources and trainings at FounderToFulltime.com there. I also have a newsletter for change makers  and non-profit leaders and you can fin

d the link to subscribe to that in my comments description on  the video and finally i have a group on Facebook called change the world or bust so if you are  on Facebook come join us there we've got a couple thousand folks from all over the world  making an impact that's all I have for today once again I'm Amber Melanie Smith and I hope  you liked this video hope to see you next time