There are several non-profit fundraising rules and regulations for charities. The IRS closely monitors fundraisers to determine if any break laws or limitations in their activities. As a result, many fundraisers end up losing their tax exemption status due to broken guidelines. As a charity organizer, familiarize yourself with fundraising rules to protect your tax exemption status, prevent IRS audits and avoid financial penalties. This way, you’ll know how to stay compliant with the IRS and host a successful fundraiser. Read on to learn about non-profit fundraising rules and regulations for charities.
Tax Exemption Rules
The first non-profit fundraising rule you should know are tax exemption standards. To gain tax-exempt standing, acquire your 501(c)(3) status from the government. Your private or public organization needs to create a charitable mission to qualify. For example, social clubs, environmental restoration, and educational organizations can meet standards for federal tax exemptions. Of course, you’ll need to reinvest or allocate your profits towards whichever charitable purpose your company revolves around. Just keep in mind that these organizations are often restricted from political or lobbying activities. This way, you can start saving on taxes for this financial year and grow financially. Surely, one non-profit fundraising rule you should understand is tax exemption.
Donation Receipt Requirements
In addition, another non-profit fundraising rule for charities to know are donation receipt requirements. When donors contribute to your organization, you must give them a written form of acknowledgement. Although you only need a receipt for donations of $250 or more, you should provide them for every dollar amount. Importantly, this official written confirmation is required for your donors to receive tax deductions. Make sure to include your organization’s name, the donor’s name and the cash contribution amount on the receipt. You can also include a description and estimate of the contributed goods’ value. In short, you should know fundraising rules regarding donation receipt requirements.
Another set of non-profit fundraising rules charities should know are registration exemptions. Since each state has its own set of exempt organizations, you should check online to see if your group qualifies. If your non-profit organization type is listed, you can file a request with the charities bureau to obtain a confirmation letter. Typically, religious, educational and PTA groups are exempt. School membership organizations such as fraternal, social or alumni groups also often count as well. In addition, you might qualify if you’re part of a law enforcement, historical or veteran organization. If a business supports charities, they can also try to apply for an exemption. Of course, you should understand registration exemption laws for your non-profit fundraising group.
Deductible Charitable Contribution Guidelines
More so, your non-profit charity should know the deductible charitable contribution fundraising guidelines. Typically, these apply when a professional organization conducts a fundraiser on your behalf. In this case, you must provide clear authorization for the professional group to act as an agent for the contributions. This way, they can qualify for tax deductions with the IRS. In addition, in-kind donations can qualify for tax deductions if their value is over $250. On the other hand, sponsorships usually aren’t taxable since they’re occasional and not directly connected with a business. Therefore, only submit if the professional fundraising organization qualifies. Definitely, know the deductible charitable contribution fundraising rules.
Soliciting Pledges Rules
Furthermore, your charity should know about soliciting pledges rules for non-profit fundraising. When you start soliciting pledges, you should communicate with your donors that their pledges are legally enforceable. Have both your organization and donors sign a contract to avoid problems like broken agreements or incorrect donation amounts. You should also have the contract reviewed by an attorney for extra protection. If someone fails to follow the contract, you can legally sue the donor. Of course, you should talk with a legal professional to determine if that’s your best option. From here, they can guide you in alternative directions to deal with donors who reneges pledges. Certainly, another rule you should know for non-profit fundraising is how to deal with soliciting pledges.
There are several non-profit fundraising rules and regulations for charities. First, tax exemption rules tell which organizations have exemption standing. In addition, donation receipt requirements state that you need a written acknowledgement on procedures of $250 or more. Next, know the registration exemption rules to determine if your organization qualifies for tax exemption. More so, the deductible charitable contribution guidelines tell how to handle charitable donations. Furthermore, understand the soliciting pledges rules to know what steps you should take if someone doesn’t follow the contract. These are various non-profit fundraising rules and regulations for charities.