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FUNDRAISING
Earned Revenue
Earned revenue strategies generate income that is tax-exempt
to the club. These strategies do not provide any charitable
tax benefit to the businesses or individual paying for
the clubs product or service. In some cases, payments
will be deductible as a business expense.
Strategies
and Techniques
Compensated
Service
This is when the club provides service for a fee. The
service or labor is completed by volunteers, and in
return the club receives a payment. As long as there
are no payments made to the volunteers, the proceeds
are tax exempt to the club. Some examples of compensated
service would include:
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Selling
food or drink for a commercial vendor: Many professional
ball parks provide an opportunity for not-for-profits
to work in concessions for a percentage of the sales
or for a flat fee. Other related types of activities
might include parking cars, directing traffic or taking
tickets for fee.
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Providing
a service: A good example is a club that does casino
nights for other organizations. These could be fundraisers
or just a corporate event, but it is critical that
these activities are not considered "charitable
gaming" by the state. Car washes are another
form of providing a service.
Selling
Clubs may also sell a product. This can increase the
risk and commitment required of the club, but can also
increase the net proceeds. What can be sold is unlimited,
but each type of product holds its own risk and reward.
Some examples include:
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Food
and drink, but unlike the compensated service, the
club actually purchases and resells the product.
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Christmas
trees, flags, fruit, nuts, coupon books and many other
seasonal items can be purchased and resold.
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Advertising sales for club or commercial publications
are another option. Examples include ad sales for
a program or event the club is hosting, or selling
ads for a special newspaper insert that provides both
income and exposure.
Regulations & Risk Managemen
Regulations
and Risk Management – Compensated Services
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Volunteers
working in return for a gift or payment to the club,
generates only limited concerns for regulation or
risk management. The primary burden for risk management,
health codes, and product liability will be on the
organization or company that hires the club.
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When
providing a service such as a casino night or car
wash, the club does have a direct liability. In the
majority of cases this is covered by the Sertoma general
liability policy. Please review the policy exclusions
for any concerns, and contact the Sertoma agent with
any questions. This information is found in the Insurance
Section.
Regulations
and Risk Management – Selling
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Major concerns for these, as with any activity, are
risk management and license issues. If a club is the
direct seller of food or beverage, especially alcohol,
it must be aware of all state and local requirements.
Application for a liquor license can be required by
the state, county or city. It varies by state, and
must be done early in the planning. Also, sale of
alcohol requires a special insurance rider; contact
the Sertoma agent as listed in the Sertoma
Insurance Programs in the Sertoma section
of the Club Manual well before you need to request
an insurance certificate.
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In
some communities, charities must register to sell
products just as any commercial vendor. Again, check
with the state, county and city for any regulations
or restrictions before committing to the activity.
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The
IRS tax-exemption deals only with the taxability of
income to the club, and does not provide any relief
or exemption from sales taxes. Requirements will vary
by location and the nature of the product being sold.
Check with your state department of revenue for specifics
on your activity.
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Some
sales will be in conjunction with other activities.
Your club might sell ads or merchandise related to
other events. Even if included in other events, the
same standards apply. Make sure to check before committing
the club to a course of action.
Fundraising
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