5 Non Profit Fundraising Rules And Regulations To Follow

Non profit organizations rely heavily on fundraisers to stay up and running. In order to do so legally, such organizations need to follow specific non profit fundraising rules and regulations. As the founder of a non profit, you need to ensure that you comply with these rules and regulations associated with fundraising for nonprofit organizations. If you fail to, you could end up in trouble with the IRS. Moreover, you could worsen your organization’s financial situation. To prevent this, read this post on the non profit fundraising rules and regulations to follow.

Regulated Activities

One of the main non profit fundraising rules and regulations that organizations like yours needs to follow involves regulated activities. In order to hold a fundraiser for your nonprofit legally, you need to find out if your state regulates fundraising activities. Some states are not authorized to do so. If you operate in these states and acquire cash flow from holding fundraisers there, you will not be able to receive donations legally. Ensure that your state regulates fundraising activities in order to abide by the rules and stay out of trouble with the IRS.

The Public Support Test

Another nonprofit fundraising rule to follow is to qualify to be a tax-exempt public charity. The IRS has a public support test that determines whether a non profit organization is tax-exempt or not. In order to pass this test, you need to obtain a certain amount of capital from the general public. If you do not meet this requirement, you will not be exempt from getting taxed. Many nonprofits fall into financial trouble when the IRS starts taxing them. Then, they need to find help with IRS debt quickly. For this reason, it is crucial that you follow the non profit fundraising rules and regulations revolving around the public support test.

Fundraising Solicitations Disclosure

Moreover, non profits must follow fundraising solicitations disclosure rules and regulations. In order to abide by the law, tax exempt non profits must disclose their fundraising solicitations. However, tax exempt organizations that can receive deductible contributions do not need to follow this rule. If you cannot receive deductible contributions, you need to maintain a fundraising solicitations disclosure process. Common non profits that need to follow this process include social welfare organizations, homeowners associations and fraternal organizations. Keep this non profit fundraising rule in mind to avoid running into any legal and/or financial trouble.

Organizational Purpose

Non profit organizations also need to follow a rule around organizational purpose. When a nonprofit holds a fundraising event that does not directly relate to their organizational purpose, they are not following the rules set by the IRS. If you hold an event that does not relate to your purpose and use the capital that you earned from it for your organization, the IRS has the right to tax your non profit. Thus, if you want to avoid taxation, you need to remain focused on your organizational purpose during fundraising activities. Then, you can comply to the non profit fundraising rules and properly use the funds you earn.

Tax Rules For Game Events

Finally, there are various non profit tax rules for game events. Contrary to many non profit founders’ beliefs, the IRS has multiple rules and regulations that must be followed during game fundraisers. If you hold such an event, you need to report winnings. More so, you need to use a Form W-2G to do so. Non profits are also required to withhold income tax from certain winnings. Depending on the game that your nonprofit partakes in, you could have to pay unrelated business income tax on the capital you won as well. Keep these game rules and regulations in mind during non profit fundraising events.

In order to maintain a good financial situation for your non profit organization, you need to do more than hold exciting fundraising events. You also need to do more than take the top executive leadership courses for nonprofit organizations. The top founders follow specific non profit fundraising rules and regulations. For instance, all nonprofits need to check that the state that they hold fundraisers in can regulate the activities. More so, understand the public support test to ensure that you qualify as a tax-exempt public charity. Follow fundraising solicitations disclosure rules and organizational purpose rules as well. Furthermore, take the time to understand tax rules for game events. Familiarize yourself with these non profit fundraising rules and regulations to fund your organization.