Fundraising from America - Part 1

Chapel & York Limited
FUNDRAISING 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, fantastic
tradition of philanthropy, highest percentage of givers
and highest levels of giving in the world. 2012: $316 bn
Americans inside & outside the USA expect to be asked
to donate to charity. Grant making Foundations expect
to be asked for money and the larger foundations fund
huge projects throughout the world.
Americans are amazing fundraisers, will form a committee
and put on an event and set very high targets for their
fundraising if they really believe in your organization.


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 %
From Corporations
From Bequests
From Foundations
From Individuals
72 %


$120

2012 contributions:
$316 billion by type of recipient organization

$100

32%

$80
$60

13%

$40
$20
$0

1%

2%

3%

5%

6%

7%

9%

10%

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 expect
extensive feedback, personalised information, with
thanks, thanks and more thanks.

Fundraising from American grant making foundations is time
consuming 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 contact
2. Application; provide exactly what the grant-makers requires
3. Find a friendly American
4. 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 nonprofit 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 nonprofit 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.



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 your
website and all fundraising materials. We are supported
by xxxxx xxx xxxx and donations to xxxxx xxx xxxx from
American taxpayers are tax deductible to the full extent
allowed by law.
Tell everyone on your database regularly. You have no
way of knowing if they are American taxpayers.



When you identify Americans, research them to identify
the high net worth individuals and put them into
leadership positions. Listen to them; they know the
American way of fundraising. They know other
wealthy people.
Internet – make sure everything you produce, website
Facebook, 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



FUNDRAISING FROM...SOCIAL MEDIA
Are Nonprofits raising money via Social Networks?
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.

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.



How does the top 1% succeed?
1. Allocate a budget. Its not all about a BIG budget though.
Organization
annual 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).



2. Staff allocation
2011

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

FTE = Full Time Equivalent

2012

2%

3%

+1%

Of the Master Fundraisers surveyed in 2012, 30% dedicate at least 2 staff members
To 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 or
increase 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 fifteen
times the general average. This number demonstrates that a prerequisite for raising big dollars via social
networks is a big community. Viral or word-of-mouth-marketing within online social networks may reduce
the cost of building a community, but nonprofits still need a large base of supporters to bring in substantial
fundraising revenue.
Include links to your social media pages on EVERYTHING. URL’s on direct mail, hyperlinks and sharing tools
on 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 Webinar

HOMEPAGE


Internal pages


Internal page

HOMEPAGE



Conclusion:
The average cost of getting a Facebook “Like” = $3.50
The average value of an individual Facebook "Like" = $214.81.

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



It’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 via
mobile 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.



It’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 871915
david.wickert@chapel-york.com

Adam Davidson +44 1342 871916
adam.davidson@chapel-york.com
Further information about all Chapel & York’s services
can 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

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