How to Create a Budget for Your Fundraising Event
The necessity of creating a budget for your fundraising
even cannot be stressed enough. It is imperative to know
how much everything is going to cost so that you will know
what to charge and so make a profit. Not only that, but
records of all monies received must be kept properly so
that no one can be accused of doing the wrong thing with
the funds. Once any hint of wrongdoing taints your cause,
your sponsors will drop you like a hot cake.
So how do you create a budget? You must get quotes for all
your costs. Every single thing that is going to cost any
money must be written down. It may be that you can find a
cheaper alternative or get something donated that you
thought you'd have to pay for, but it all has to be down
there in black and white.
You may need to pay for entertainment, catering, speakers,
sound equipment, venue, advertising, gifts, decorations and
other things that you will think of, depending on the kind
of event you are arranging. You also need to write down all
your income such as ticket sales, sponsorship, donations
and the like. Add them all up and subtract the expenses
from the income. If there is not much profit, then you may
need to comb through it to see where you can cut costs.
Remember that local people may be willing to donate their
expertise or equipment for free to help you cut costs. Even
the cost of the venue could be heavily discounted, if not
free. If you don't ask, you'll never know, so don't be shy.
Also look at alternatives. If you were going for a full
band, try a DJ with sound equipment instead. Change the
menu to something a little simpler.
Even if your event is something as simple as a car wash,
you still need to have a budget. It will be a much simpler
budget of course, but you still need to account for the
cleaning products used, don't you?
If your event is a really big and complicated one, it may
pay you to get special software to help you create the
budget. While you're at it, get one of those volunteers who
has accountancy skills to do it for you. Or if none of them
have, go to your local accountant and ask if he would be
willing to donate his time to do it. What a good idea!
Legal and Tax Issues for Fundraising Activities
In many states funds gained by fundraising are not taxable,
but it sometimes depends on the organization. For instance,
in Illinois, if your organization were considered to be
religious, educational or charitable you would need to make
an application for exemption 'E' status. This would entitle
you to be exempt from incurring Use Tax in some cases.
In some states, religious groups must collect tax on sales,
but they may have one tax free sale per year so long as
they own what they sell and are selling to members of the
public. The sale must not last more than three consecutive
days and must be conducted by members of the organization.
In other states, any non-profit organization is exempt from
tax. If schools hold a book fair in conjunction with the
publisher and get a percentage of their profit for
fundraising, they don't have to pay tax on it, but the
publisher must pay tax on their portion.
For individuals who deicide to raise money for a charitable
cause, if you keep it under a few hundred dollars, then you
can probably get away without any legal work - except that
you must always keep a strict record of your budget and all
financial comings and goings. However, if you are thinking
in bigger terms, you may be wise to set up a charitable
organization that will be exempt from taxes under the IRS
Section 501 (c) (3).
The reason for this is that whatever money you get is
considered part of your income and you have to pay tax on
it yourself, even though you are not going to keep it. The
IRS will want to know exactly how much you made and where
it came from and what you did with it. If you can't answer
them, they will - to put it mildly - be annoyed. And you
will be in hot water.
Another reason is that at least some people - and maybe
most - will want a receipt so they can write that donation
off on their tax. If you give them a personal receipt it
cannot be legally used for that purpose. They will want to
know how their money is going to be spent and you are
accountable to them for it. If you have an organization,
they will be able to verify your trustworthiness by looking
at the books and other things that such an organization
must have.
It would be a good idea to take half an hour to consult
with an attorney about the whole business. If you follow
his advice, it will protect you from possible problems
further down the track.
How Will You Thank Your Supporters?
Once the fundraising even is over and has been successful,
then you will need to thank your supporters and this can be
done in a variety of ways. Firstly, your supporters are not
only those who made donations, but those volunteers who
spent so much time and effort in making the event a
success. They deserve recognition and thanks just as much
as the sponsors, because without them the event would not
even have happened. In fact, the volunteers have worked
harder than the sponsors, because all they had to do was
write out the check.
To thank the volunteers, a barbecue may be given especially
for them. If it is a 'sausage sizzle' you will only need
the sausages, bread and sauce so it shouldn't be too
expensive. This can be held after the event and can be by
official invitation or by word-of-mouth. Just be sure
everyone knows about it, or bad feelings will be the
result. If you don't want to organize a barbecue, then you
could thank the volunteers in a different way. A thank you
letter or card would be appreciated.
To thank the supporters for their donations a letter of
thanks is in order. But don't stop at the letter; they will
like to know exactly how their money made a difference to
the cause. If possible, let them see the real evidence by
sending a photo of the results. Whether it was computers
for the school or rescuing abused pets, it's not hard to
take a photo. If you can also show the students using the
computers, or the rescued animal in its new home, it will
add that personal touch. You may have to get parents'
permission for photos of students, though.
Of course, it may take a while to get these photos and you
don't want to leave it too long before sending that
thank-you letter, so firstly, send a preliminary letter of
thanks along with a copy of your budget showing the profit
and itemize what the proceeds will be used for. Then later,
when these goals have been accomplished, send another
letter of thanks with the results. This can be up to
several months later and will serve to give your
organization a high profile.
When you esteem and honor a company in this personal way,
and they can see how their donation made a difference, they
will be more than willing to make further donations when
the time comes. However, it would be inappropriate to
mention this possibility in your thank-you letter.
More to come in Part 6...
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