FUNDRAISING
Contributed Revenue


Strategies and techniques to generate contributed revenue are limited to those charities holding a 501(c)(3) tax exemption. Each Sertoma club has this exemption through the Sertoma's group exemption. Specifics on how to manage this exemption is found in the Treasurer Manual.

Full discussion of these techniques is beyond the scope of this manual, please refer to the Resources page or contact Headquarters staff for additional information, support and training options.

Direct Solicitation
An effective form of fundraising is to simply ask a business, foundation or individual for a charitable gift. Unlike any other of the forms of non-dues revenue, these gifts typically qualify as wholly tax deductible. A trait of these types of gifts is that other than a thank you or similar recognition, the donor receives no benefit.

These techniques are not the best starting point for clubs to build a charitable gifts strategy. As a club develops a clear mission in their community, builds recognition for the need, and identifies a target audience, these techniques should be considered. In addition, these techniques are not without investment and do require volunteers to be well trained and experienced in research, cultivation and solicitation.

Given the proper investment and time to develop, these efforts can produce a source of continuing and growing revenue.

Strategies and Techniques
Personal solicitation by mail, email, face-to-face and phone solicitation. Successful personal solicitation requires three elements to be successful:

  • a strong and specific case of support (what the funds are for and the impact)
  • a well crafted request (either written or verbal) that can reach the potential donor on a personal level. In the case of a verbal request an experienced and trained solicitor is essential.
  • a targeted audience of potential or current donors. – You cannot mail or personally contact everyone, so a well defined target audience is critical to the best return on the use of time and money.
Issues and Requirements
  • Segmentation: Effective direct solicitation targets the potential donor based on a variety of factors. Degree of interest, previous involvement and support, and knowledge of the need or organization.
  • Record Keeping: Soliciting and accepting charitable gifts requires good record keeping. A club needs to track who and how individuals are solicited as well as provide appropriate receipts and recognition for the donors.
Grant writing is another effective form of direct solicitation. It is also one of the most competitive types of fundraising. Foundation, corporate and government agencies fund only a fraction of grant proposals received. To be effective, you must:
  • Be prepared with a clear case of support: outline the need, the impact funding will have (be specific), clear budgets with no math errors, and how and who will manage the funds.
  • Understand the donor. Grant makers usually have specific areas of interest and/or a limit on the types of organizations they fund. Do your research to make sure you are not wasting time soliciting the wrong organization.
  • Follow the rules!! Every grant maker has a process they want followed. It might be a two page letter, a specific form or format. If it says no attachments, send no attachments. Requests that do not follow the guidelines are not considered or even reviewed.
  • Be prepared to provide a written evaluation or report if the grant is received. Many foundations and government agencies will want documentation on the use and outcome of funds they grant. For larger grants they can request a separate audit as part of providing the funding.

Special Events
Special events can be very effective in building non-dues revenue for a club. There is an almost limitless variety and flexibility to meet the needs and interest of the community. They can require more human energy and risk more financial resources than other forms of fund raising. However, done properly they can yield multiple benefits not provided from other strategies, including:

  • Increase public awareness of the club and its sponsorship
  • Provide multiple volunteer roles to engage the varied interests of people
  • Enhance volunteer and leadership development efforts
  • Create recruiting opportunities
  • Expand and strengthen donor relations
  • Generate revenue

The down-side and equally real side of special events is that there are real risks involved. Organizations suffer significant losses from events that, although wonderful in their conception, still failed in implementation or planning. Examples of these risks include:

  • Weather – Outdoor events are always subject to Mother Nature. You can buy insurance to cover cancellation due to weather in some cases. This is usually costly and does nothing if a cold snap or rain just keeps the majority of people at home.
  • Free Performers – Free is a relative term as many organizations have learned. Even if there is not a "performance fee" often time there are significant costs for expenses that might include food, travel and lodging for family or entourage members. Also, there is usually an understanding that they can cancel without cause or cost, leaving an organization with substantial expense and no event.
  • "Murphy's Law" – We would like to think no one would sue a charity. Unfortunately that is not true and poor risk management can devastate an event and the sponsoring organization. This is especially true if your event involves alcohol. Every aspect of the participants experience from when they park the car until they leave for home should be reviewed for potential risks.

Strategies and Techniques
There are many good books on the subject in general and on specific events such as golf, black tie or auction events. In addition, several Sertoma clubs have provided information on their successful events that are compiled in the How-To Guides in this section of the Club Manual. Refer to the Resources page or contact Headquarters staff for additional information, support and training options.

Charitable Gaming
Charitable gaming continues to grow as a significant source of non-dues revenue for charities. In the last decade, annual receipts from charitable gaming passed the $7 billion mark. Behind the popularity of charitable gaming is a real issue for any not-for-profit using this technique – it is one of the most highly regulated forms of fund raising.
All techniques and strategies of gaming are accountable for federal regulation. In addition, state and local regulations and licensing issues can be significantly more restrictive. These vary greatly from state to state, so it is critical to understand those in your state. Failure to adhere to these laws can result in fines, loss of the tax exemption and even imprisonment.

The following list of concerns is not all-inclusive or representative of any particular state, but is provided as a representation of the types of issues involved.

Regulatory concerns

  • Limits on those authorized to "work" charitable gaming activities including:
  • Limits on those who qualify as volunteers that can actually participate in the sale of tickets or operation on games.
  • Use of paid staff if allowed, increases the reporting requirements, and creates an additional tax issue for the club.
  • Minors are, almost without exception, excluded from working or participating in any charitable gaming activities.
  • Limits on types of games of chance are typically defined by the license or permit the club receives. An authorization for bingo may not allow a club to do a raffle or pull-tabs or a "poker" event.
  • Limits on the amounts of jackpots or value of prizes.

Record Keeping and Reporting

  • At a minimum, the requirement is for a separate account that receives all proceeds and from which all expenses and distributions are made. In addition, there should be a detailed record keeping system for:
    • Supplies purchased and used to date
    • Daily and/or weekly reconciliations depending on the specific gaming operation.
    • Copies of all invoices and receipts related to operating any gaming activity
    • Names of all winners, with necessary information for withholding and information reporting
      • Form -2G is required for $600 single winning pull ticket, and for $1,200 bingo or slot machine play (not reduced by wager).
      • If winner does not or cannot provide a tax payer ID (social security number) in addition to the Form -2G the club must withhold 31% of the winnings.
      • Additional requirements are involved with larger winnings, and a club needs to be aware of all such requirements

Use of Proceeds
Both federal and state statutes impact the use of proceeds under the definitions of "lawful purpose expenditures" and for "charitable support." These can vary greatly by state, but such statutes may:

  • Establish percentage of funds used for charitable purpose, either in support of the club's tax-exempt purpose or require it contribute proceeds to other qualified organizations
  • Require minimum payouts from gaming activities (100%, 45%, etc.)
  • Define allowable period in which net proceeds are expended
  • Limit percentage of allowable expenses as a percentage of gross revenue
  • Define allowable expenses in operation of gaming activities

NOTE: Probably the greatest concern in this area relates to inurnment and private benefit. It is critical that the club not engage in transactions that serve private interests more than insubstantially or that allow the club's earning to provide a benefit to any individual/s. Though this is true of all financial transactions of the club, special emphasis is placed on the record keeping and accounting of funds related to charitable gaming.

Fundraising - Table of Contents

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