Holding Special Events

(Page 2 of 2 of Nonprofit Fundraising Methods: An Overview )

Almost every nonprofit, big or small, holds a special event or two each year--whether it's an impromptu garage sale or a gala annual dinner. Events are a fun and easy way to mobilize volunteers who aren't otherwise interested in fundraising.

But there's a catch. The bigger the event, the greater the risk of it turning into a financial flop. And even successful events often produce a relatively low return after you consider all the hours that go into them.

Still, events can serve purposes other than straight fundraising, namely to raise the organization's visibility and bring in new members. The key is to identify the main purpose of the event (for example, is it a friend raiser or a fundraiser?) and then plan with that in mind.

Another key principle to incorporate into your event planning is that ticket sales are unlikely to cover the entire event cost, much less turn into a profit source. You'll need to augment the income by finding event sponsors and incorporating other methods of fundraising within the event, such as raffles, T-shirt sales, or an auction.

And whether or not you're an environmental organization, think about how you might green your event, both to be a good environmental citizen and for the sake of public relations. You'll find some tips on that in Nolo's article Green Event Planning for Your Nonprofit Charity.

Raising Money From Business or Sales

An increasingly popular method of nonprofit fundraising is to enter the world of business and sell goods or services to regular (or charitably minded) consumers. This can encompass anything from kids selling cookies to museums running gift shops to organizations providing their own clients with job training, perhaps in bicycle repair or Web design.

It's important to remember that a nonprofit is a business and is itself allowed to make a profit--for example, on client fees--so long as it doesn't use those profits for the personal benefit of those in charge. But running a separate business within your organization does have tax implications and may lead to the nonprofit having to pay tax on the earnings or, in a worst-case scenario, losing its nonprofit status. (For more information, read Tax Concerns When Your Nonprofit Corporation Earns Money.)

When it works, business activities can provide a source of income with almost no strings attached -- no foundation reporting requirements or donor wishes to worry about. But launching a business can be a risky proposition even in the for-profit world, so it's best to start small, get good advice, and be realistic.

Applying for Foundation Grants

Nonprofits are entitled to seek grants from foundations -- that is fellow nonprofits, often started by wealthy families or corporations, that give out money for specific charitable purposes of their choosing. The grant is usually for a specific amount of money, either paid in advance or on a reimbursement basis.

The best thing about grants is that they're usually for a reasonably large sum of money--at least a few thousand dollars, and often far more. They often allow a nonprofit to start a new project or hire a new staff person.

The worst thing about grants is that they don't come with any guarantee of renewal. In fact, the opposite is true, since many foundations prefer to move on to the next new thing and expect that your group will have used the grant as leverage with which to increase other forms of support (as if!). Grants also tend to come with stringent oversight and reporting requirements.

To apply for a grant, an organization can make use of research tools provided by groups like The Foundation Center (at http://foundationcenter.org). Application procedures are usually spelled out by each individual foundation. Be sure that your group or project really fits the foundation's eligibility requirements -- a common complaint from foundation grantmakers is that nonprofits submit inappropriate grant proposals.

Applying for Government Grants

Another source of grant funding is local, state, and federal government agencies. These grant amounts are often high, so that some nonprofits subsist almost entirely on government money. And being able to attract and keep government grants gives your group stature and credibility, thus helping you attract other funds.

The downside is the often overwhelming application requirements--mounds of paperwork and added requirements such as the formation of oversight committees. Also, government funders tend to be risk averse, preferring established nonprofits with proven records of success to new, grassroots initiatives.

Requesting Corporate Gifts

The business sector, sometimes in an effort to boost its public image, is also a potential source of nonprofit funding. The largest gifts are typically available through corporate foundations, as described above. However, you may also be able to approach smaller businesses for donations, both cash and in-kind, as well as for sponsorships, say, of a team or event.

In-kind donations come in particularly handy when you're planning a raffle, auction, or meal event. A local business might contribute such goods as flowers, wine, food, jewelry, clothing, other gifts, tickets for travel or cultural or sporting events, a night's stay at a hotel, services from a spa or salon, and so on. Businesses can also lend you needed equipment for an event, such as tablecloths and wine glasses.

Also look into getting volunteer help from local businesses' staff. For example, a local restaurant might lend you a cook or bartender for an evening.

Find out each business's specific procedures, and whether there's a person dedicated to working with charities, before making your pitch. And be sure to give the businesses lots of return recognition (but not outright advertising, which could complicate matters tax-wise).

To learn more about all aspects of these and other fundraising methods, get Effective Fundraising for Nonprofits: Real-World Strategies That Work, by Ilona Bray (Nolo).

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