Fundraising from America - Part 1

Chapel & York LimitedFUNDRAISING FROM AMERICA WEBINAR SERIES

PART 1: An introduction: Starting Up and Fundraising

Chapel & York Webinar:

Starting up and fundraising

IS AMERICA RIGHT FOR YOUR ORGANIZATION?

- American Constituency- Unique & Persuasive Mission

- Tour or Exhibit in the USA- American Mission

- No American Competition- They live outside the USA...liable to pay US tax

because they are Americans



Do you understand the language the language & culture of philanthropy in America?

How does the tax and legal system work in respect to charities in America?

Who can advise us? CHAPEL & YORK



Opportunities

USA is a huge philanthropy opportunity, fantastictradition of philanthropy, highest percentage of giversand highest levels of giving in the world. 2012: $316 bn

Americans inside & outside the USA expect to be askedto donate to charity. Grant making Foundations expectto be asked for money and the larger foundations fundhuge projects throughout the world.

Americans are amazing fundraisers, will form a committeeand put on an event and set very high targets for theirfundraising if they really believe in your organization.

Chapel & York Webinar:Starting up and Fundraising

FUNDRAISING – Who Gives the most to what? In 2012 the total giving in the USA was $316 billion

6 %7 %

15 %

72 %

From Corporations

From Bequests

From Foundations

From Individuals

Chapel & York Webinar:Starting up and Fundraising

2012 contributions: $316 billion by type of recipient organization

Individuals

Unalloca

ted

Animals &

Environment

Arts, C

ulture, H

umanties

International A

ffairs

Public Socie

ty Benefit

Health

Foundations

Human Services

Education

Religion

$0

$20

$40

$60

$80

$100

$120

1% 2%3%

5%6% 7%

9%10%

13%

32%

13%



Pitfalls

Unless you were born and bred an American, America is a foreign country. So it’s easy to get things wrong.

American donors can be high maintenance. They expectextensive feedback, personalised information, withthanks, thanks and more thanks.

Fundraising from American grant making foundations is timeconsuming and a steep learning curve.



Why does an American support a charity outside the USA?

Some major reasons: ● Americans have lived in your country and supported you.●You are a school or university and your alumni live in America.●Americans who live outside the USA want to support charities where they live with US taxed income & get a tax deduction.●Your charity does work that particularly interests them.●Your charity does work that isn’t done by a US nonprofit.●Some existing supporters of your charity have moved to the USA and want to support your charity from US taxed income.●Your charity tours or exhibits in the USA and attracts American donors.●NOTE: Your database may be a goldmine - the most important American fundraising resource you own. ●Can you think of other reasons why your charity may be supported by Americans?



What about US Grant making Foundations?

What do they do? They fund non-profits that offer services. Some foundations offer services as well as making grants.

How do I find foundations that may support our charity? Use Google or Foundation Search or Grant makers online (free)

Overview:What is a Letter of Inquiry?

4 points when you consider an application to a Foundation:

1. Personal contact2. Application; provide exactly what the grant-makers requires3. Find a friendly American4. One application doesn’t fit all

www.chapel-york.com





WHAT IS A 501(c)(3)?

American non-profits, sometimes called charities, are very often referred to as 501(c)(3)s, particularly

by philanthropy professionals. 501(c)(3) is the section of the Internal Revenue Code that describes

tax exempt organizations.

Private Foundation, Public Charity



SETTING UP A 501(c)(3)

WHY SET UP A 501(c)(3)in the USA? Is it really necessary? No it isn’t!

We’ll discuss the alternatives when we have sorted out TAX DEDUCTIONS!



US TAX DEDUCTION

Tax effective in UK =

Tax deductible in USA



ILLUSTRATION OF US TAX DEDUCTION

Itemized deduction: Mary earns $400,000 and she makes a donation of

$10,000 to a local non-profit. This reduces her taxable income to $390,000.

If she pays tax at 35% this will save her paying $3,500 tax which means the donation only costs her $6,500.



TAX DEDUCTION FOR EVERY DONATION

US taxpayers are used to getting a tax deduction for every donation they make and they expect it.

The benefit is to the donor: the opposite of Gift Aid! $250 and over must be substantiated

by a receipt from the non-profit.



YES!! NO TAX DEDUCTION FOR DONATIONS TO A NON-US

CHARITY

No tax deduction available if a US taxpayer makes a donation to a non-American non-profit

e.g. to a UK registered charity.

We’ll come back to this in just a few minutes but first………..



THERE ARE DIFFERENT TYPES OF 501(c)(3) NON-PROFITS

Unlike the UK where, basically, a charity is a charity and it defines itself by what it chooses to do, deliver services,

make grants, or both, in the USA when a non-profit is set up it is a Private Foundation unless it specifically chooses otherwise. Notable Private Foundations include the Bill & Melinda Gates, Ford, Rockefeller, & Carnegie Corporation.



501(c)(3) PRIVATE FOUNDATIONS

Private foundations are set up primarily to support public charities and are funded by an individual, group of people,

or company, and are subject to detailed rules and restrictions including self dealing, annual distributions, excise tax on net investment income and limitations on

private business holdings. These are safeguards to prevent abuse by the funders.



501(c)(3) PUBLIC CHARITIES

When a US non-profit is set up the incorporators can choose to set it up as a Public Charity, not a Private

Foundation. Public Charities are funded by the general public and by grants from foundations and public bodies. E.G. American Red Cross, Doctors Without Borders, Oxfam

America.

Public Charities are more lightly regulated than Private Foundations.



SO NOW...

If an individual taxpayer wishes to make a grant to a non-profit set up outside the USA, AND GET A TAX

DEDUCTION, the donor can make a donation to an accommodating Public Charity and suggest the recipient. It can only be a suggestion. If the Public Charity doesn’t

have full discretion & control over the funds it becomes a conduit, and no tax deduction.

The US non-profit must establish that the non-US charity is a suitable grantee under US law.



SO YOUR CHOICE IS……

If you want to attract donations from American taxpayers for your organization you must either

(a) work with an existing US Public Charity that will accept donations and consider a suggestion of a non-US

charitable recipient, or

(b) set up an accommodating US Public Charity to support you.



(1) WORK WITH AN EXISTING PUBLIC CHARITY

E.G. American Fund for Charities www.americanfund.info The American Fund retain a percentage of each donation to

cover its overheads. Minimum retained $50. Up to $10,000 7.50%. Next $90,000 5.00%. Over $100,000 $2.5%. Maximum retained from any

donation generally $10,000. Evaluation $250. Annual Renewal $150.

No management or governance obligations but no name recognition, no individual listing online on GuideStar and no

individual listing by IRS etc.

http://www.americanfund.info/



www.americanfund.info



(2) SET UP A PUBLIC CHARITY TO SUPPORT YOUR ORGANIZATION

You are setting up an entirely independent organization in the USA. You can refer to it as a (brother or) sister

organization, but should avoid getting into the habit of calling it “our ....”



REQUIRED TO SET UP:

Name, Incorporate in a US State, identify Board of Directors, appoint a Registered Agent.

Apply for tax exempt status (Form 1023). Negotiate with IRS. May take several months. 501(c)(3) status, when granted, is “good” for all 50 States plus DC.Chapel & York can set up a Public Charity for you. The

current cost is £8,310 plus VAT.



DONOR ADVISED FUND



FUNDRAISING / GRANT APPLICATIONS –DIFFERENCES BETWEEN US & UK

- USA is a foreign country. - America is insular.

- Don’t confuse New York or Washington DC with the US of A.

- Americans are patriotic.

- Americans are, in comparison with Brits, still deeply religious.

- Understanding American (the language).

- Culturally Americans are proud of their independence.

- Americans are very welcoming, generous.

- Americans are not universally liked

- Failure in the USA is regarded as a learning experience.

- Non Americans are usually given the benefit of the doubt for a

while.

- Americans are naturally positive.



Fundraising Strategy

TELL EVERYONE and put it everywhere, specially on yourwebsite and all fundraising materials. We are supportedby xxxxx xxx xxxx and donations to xxxxx xxx xxxx fromAmerican taxpayers are tax deductible to the full extentallowed by law.

Tell everyone on your database regularly. You have noway of knowing if they are American taxpayers.



When you identify Americans, research them to identifythe high net worth individuals and put them intoleadership positions. Listen to them; they know theAmerican way of fundraising. They know otherwealthy people.

Internet – make sure everything you produce, websiteFacebook, Twitter, emails, and hard copy publications gives American tax payers a reminder to make a donation.



FUNDRAISING FROM...INDIVIDUALS

“American” Website; “American” literature; “American” information

Sponsorship; name recognition



FUNDRAISING FROM... COMPANIES / COMPANY

FOUNDATIONS

Local, profitable

In USA, see guidelines.



FUNDRAISING FROM...GRANT MAKING FOUNDATIONS

• Identify the Foundation. Foundation Search. Foundation Directory Online.

• Review their grant-making history e.g. have they funded organizations/ projects similar to your organization/your project?

• Review the application requirements to ensure you qualify. Deadlines.

• Identify any personal contacts with the Foundation. Establish if the Foundation will communicate with you directly, email, telephone.

• Establish if the foundation will give to you directly, or will only give through the 501(c)(3) supporting your organization.



FUNDRAISING FROM...GRANT MAKING FOUNDATIONS

[cont]

• Prepare an application exactly as the foundation requests. It may need to be written as from the 501(c)(3) supporting your organization and signed by the President.

• Ask an American to review your application and the covering letter to ensure it reads as from an educated person and an organization with the capacity to complete the project.

• Say thank You! And ask why you failed if refused.• If you succeed report progress exactly as requested.• It’s a Naming Opportunity!



DONATED PROPERTY

Tax deductible to the donor. Must relate to the exempt purpose of the non-profit. Property must be held for 3

years and cannot be sold and the money used to support for the exempt purpose.



WHAT IS PLANNED GIVING?



Planned giving, sometimes referred to as gift planning, may be defined as a method of supporting non-profits and charities that enables philanthropic individuals or donors to make larger gifts than they could make from their income. While some planned gifts provide a life-long income to the donor, others use estate and tax planning techniques to provide for charity and other heirs in ways that maximize the gift and/or minimize its impact on the donor's estate.

Thus, by definition, a planned gift is any major gift, made in lifetime or at death as part of a donor’s overall financial and/or estate planning.

By contrast, gifts to the annual fund or for membership dues are made from a donor’s discretionary income, and while they may be budgeted for, they are not planned.

Whether a donor uses cash, appreciated securities/stock, real estate, artwork, partnership interests, personal property, life insurance, a retirement plan, etc., the benefits of funding a planned gift can make this type of charitable giving very attractive to both donor and charity.



WHAT ARE THE 3 TYPES OF PLANNED GIFTS?

• First, outright gifts that use appreciated assets as a substitute for cash;

• Second, gifts that return income or other financial benefits to the donor in return for the

contribution;

• Third, gifts payable upon the donor’s death.



What gift plans return income to donors?Charitable gift annuities make fixed payments, starting either when the gift is made (an immediate-payment gift annuity) or at a later date (a deferred or flexible gift annuity). Some organizations maintain pooled income funds, which commingle donations, pay beneficiaries variable depending on the earnings of the fund, and generally operate like a charitable mutual fund. Charitable remainder unitrusts and annuity trusts are individually managed trusts that pay the beneficiaries either a fixed percentage of trust income or a fixed dollar amount.

What are the tax benefits of planned gifts?Donors can contribute appreciated property, like securities or real estate, receive a charitable deduction for the full market value of the asset, and pay no capital gains tax on the transfer. Donors who establish a life-income gift receive a tax deduction for the full, fair market value of the assets contributed, minus the present value of the income interest retained; if they fund their gift with appreciated property they pay no upfront capital gains tax on the transfer.Gifts payable to charity upon the donor’s death, like a bequest or a beneficiary designation in a life insurance policy or retirement account, do not generate a lifetime income tax deduction for the donor, but they are exempt from estate tax.



FUNDRAIAING FROM SOCIAL MEDIA

&

THE MOBILE REVOLUTION

presented by Adam Davidson

Are Nonprofits raising money via Social Networks?

30% have raised less than $1,000, less than 1% of all nonprofits have raised more than $100,000 via Facebook in the last 12 months.

While the number of organizations raising between $1 to $10K annually on social networks has risen each year from 38% in 2009 to 56% in 2012, the number of nonprofits raising $100,000 or more per year on social networks doubled this year to 0.8%, a very thin slice of the sector.

FUNDRAISING FROM...SOCIAL MEDIA

Chapel & York Webinar: Starting up and fundraising

How does the top 1% succeed?


1. Allocate a budget. Its not all about a BIG budget though.

Organizationannual budget

Organizations who raised over $100K

$1 to $5M 30%

$6M to $50M 8%

$51M to $250M 37%

>$250M 25%

30% of the Master Fundraisers were Small organizations ($1 to $5M annual budget) and 8% were Medium-sized ($6M to $50M).


FUNDRAISING FROM...SOCIAL MEDIA2. Staff allocation

2011 2012

¼ to ½ FTE 61% 56% - 5%

½ FTE 11% 12% +1 %

¾ to 1 FTE 8% 10% +2%

>1 to 2 FTE's 5% 8% +3%

More than 2 FTE's 2% 3% +1%

FTE = Full Time Equivalent

Of the Master Fundraisers surveyed in 2012, 30% dedicate at least 2 staff membersTo managing their social media presence compared to merely 3% for the rest of the industry.

94% of organizations reported that they will keep their staffing allocations the same orincrease them over the next twelve months.





3. Build a fanbase

The average Facebook following of a Master Social Fundraiser is nearly 100,000 members more than fifteentimes the general average. This number demonstrates that a prerequisite for raising big dollars via socialnetworks is a big community. Viral or word-of-mouth-marketing within online social networks may reducethe cost of building a community, but nonprofits still need a large base of supporters to bring in substantialfundraising revenue.Include links to your social media pages on EVERYTHING. URL’s on direct mail, hyperlinks and sharing toolson emails and direct links and feeds on your website.

Keep your audience engaged.

- Type of posts- Post fresh content. Daily- Variety. - Incorporate a Call to Action- No Duplicate posting over multiple networks- Reply, reply, reply


Chapel & York WebinarStarting up and Fundraising

HOMEPAGE

Internal pages


Internal page

HOMEPAGE


This includes money raised from both online and offline channels such as revenue from individual donations, membership, events, merchandise, etc.

The average cost of getting a Facebook “Like” = $3.50

The average value of an individual Facebook "Like" = $214.81.


Conclusion:



THE MOBILE REVOLUTIONIt’s not a question if the mobile revolution is upon us (because it already is) but how your organization will embrace it!

EMAIL

- 66% of Gmail opens occur on mobile devices, with only 19% opened on a web browser (Litmus)

- 64% of decision-makers read their email viamobile devices (TopRankBlog).

- 33% off email recipients open email based on subject line alone (Convince & Convert) .

- Subject lines fewer than 10 characters long had an open rate of 58% (Adestra) .

- Recipients often only read the subject line or the first few lines of an email. Include your CTA early on in your email.



THE MOBILE REVOLUTIONIt’s not a question if the mobile revolution is upon us (because it already is) but how your organization will embrace it!

WEBSITES

- People don’t surf on smartphones. 90% of searches on phones results in an action!

- People are no longer clicking on links, they are tapping on phones and tablets whilst browsing your site so make sure you have large navigational banners ideal for thumbs and fingers.

- Prioritise content and keep the layout simple.



Webinar presenters:

David Wickert +44 1342 [email protected]

Adam Davidson +44 1342 [email protected]

Further information about all Chapel & York’s servicescan be found at www.chapel-york.com

For latest information about our publications, seminars, workshops, webinars and much more, please follow us on Twitter @chapelyork

mailto:[email protected]

mailto:[email protected]

http://www.chapel-york.com/

https://twitter.com/chapelyork

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Fundraising from America - Part 1