Fundraising Financials: Keep the Records Straight

Fundraising Financials

Fundraising Financials: Keep the Records Straight

Fundraising Finances: Keep the Records Straight: Understanding Fundraising Finances


Let’s face it, fundraising is all about the money!  A basic working knowledge of a typical household budget is great but let’s broaden your financial acumen.  Once you start handling monies for an organization more stringent procedures are in order.  Fundraising financials also need to be orderly.  Don’t worry– you don’t need to be an accounting aficionado but you do need to have in place checks & balances to keep the budget accurate. The fundraising chairperson is responsible for establishing, reporting and managing the fundraising budget.  This happens in collaboration with the entire board to determine overall goals, then the fundraising committee can get to work.  






Managing Finances

Start with a nice chat with the Treasurer.  Most likely there are already financial protocols in place for receiving and recording monetary transactions.  Understanding the processes from the start will help prevent any ‘learning on the job’ experiences.  At a minimum there should be a budget and expectations alignment in duties and responsibilities.


The Treasurer should have in place standard forms and policies to manage the day-to-day transactions.  As the Fundraising Chair responsibilities will relate only to the fundraising budget and activities.  


To make the learning curve shorter when beginning a fundraiser, retrieve records and documents from the prior year to help make decisions that keep the good stuff going and improve upon areas of opportunities.  In addition, ask the prior year’s chairperson for their overall opinion on the fundraising event.  This gives you a good understanding on do’s and don’ts and allows you to develop a rapport with the prior year chairperson.  You never know when you may need to call upon them for advice.


Do keep accurate records on planning and spending for fundraising activities.  It’s ok to invest some money to make money but do so with a strategy in place.  Do the math, will X dollars yield X% back?  What is the point of diminishing returns?  The answer may not be so clear with the first fundraiser, or the first year but record and learn from each event.  


Handling Financial Transactions

Understand how the organization handles and records financial transactions.  There should be standard forms to transfer cash, count cash, request checks and disbursements.  Always try to have two people to double check cash and receivables.   Standardize financial transactions such as:

  • Receiving cash
  • Recording cash
  • Depositing cash
  • Receiving credit card payment
  • Reimbursement for expenses
  • Document preservation requirements (ie receipts, vendor agreements, emails)



Organization Obligations

It is imperative that all fundraising activities and flow of funds is recorded and transparent.  Communication is the key to any healthy relationship.  This is never more true when money and finances are involved.  Accurate accounting and reporting to the board serves as further communication and clarity.  Ongoing status checks and updates keeps everyone on the same page.  Regular reporting provides an opportunity to review and adjust plans as needed.  


  1.  Do you have a copy of  the bylaws?

If you do not have a copy of the by laws ask for one.  Understand the bylaws as it relates to fundraising and finances.  This will always serve as the roadmap and guidance.  Who is responsible or permitted to sign vendor agreements and contracts?


  1.    What is the fundraising teams responsibility for handling monies?

Will the fundraising team be responsible or is the treasurer going to handle this? What is the protocol for cash collection?  It is important to establish checks and balances when dealing with cash especially since there is no paper trail.  


  1.    What is expected in terms of budgeting?

Consider timeframes for fundraising and spending for the entire fiscal year.  How much money came in last year, what changes did or will the organization incur?  This can be in terms of people contributing, fundraising programs changing or overall climate and needs.  For instance: if the fundraising efforts are for a school,  are there any large donors that are outgoing or incoming from the institution?  Fundraising for a sports team or club, are there any participants moving to the next level and leaving the potential donation stream?


  1. Personally, how are you protected should a problem occur? Is an insurance policy in place and what and whom is covered?   Board members could be held personally liable for the actions of organization.  Review your exposure to determine if  insurance policy is necessary to protect your organization’s mission and board members.


Fox Tip: Secure and READ the organization bylaws before touching a penny.


External Obligations

Sharing goals and successes outside the board to the general membership and stakeholders.  They too deserve to know goals and purposes of fundraising.  Sharing success stories and coming full circle should also be part of the communication plan.  


Fiduciary responsibility & reporting is not just internal.  Income of any sort does need to be documented.  Every organization has external obligations, depending on the location and tax status obligations may be required Federal, State, and sales tax.  Review the synopsis paragraphs below but refer to the direct links for more details and the  most up-to date information.  


NOTE: Fundraising Fox is providing links and information as a convenience, not as financial consultancy or a tax professional.  Please seek the advice of a licensed individual in your state for for qualified guidance.


IRS provide an online training available at the IRS microsite  Tax-Exempt Status.

“An organization may qualify for exemption from federal income tax if it is organized and operated exclusively for one or more of the following purposes. religious, charitable, scientific, testing for public safety, literary, educational, fostering national or international amateur sports competition (but only if none of its activities involve providing athletic facilities or equipment, prevention of cruelty to children or animals.”

“According to the IRS to qualify, the organization must be a corporation, community chest, fund, articles of association, or foundation. A trust is a fund or foundation and will qualify. However, an individual or a partnership won’t qualify.”


IRS Tax Information for Charitable Organizations for Exemption Requirements – 501(c)(3) Organizations


Copied and linked from IRS page Exemption Requirements  on 7/2017


“To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual. In addition, it may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.”

“Organizations described in section 501(c)(3) are commonly referred to as charitable organizations. Organizations described in section 501(c)(3), other than testing for public safety organizations, are eligible to receive tax-deductible contributions in accordance with Code section 170.”

“The organization must not be organized or operated for the benefit of private interests, and no part of a section 501(c)(3) organization’s net earnings may inure to the benefit of any private shareholder or individual. If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any organization managers agreeing to the transaction.”

“Section 501(c)(3) organizations are restricted in how much political and legislative (lobbying) activities they may conduct. For a detailed discussion, see Political and Lobbying Activities. For more information about lobbying activities by charities, see the article Lobbying Issues; for more information about political activities of charities, see the FY-2002 CPE topic Election Year Issues.”



IRS Charitable Solicitation – State Requirements

Copied and linked from IRS page Charitable Solicitation State Requirement

Linked and copied 7/2017

“Many states have laws regulating the solicitation of funds for charitable purposes. These statutes generally require organizations to register with a state agency before soliciting the state’s residents for contributions, providing exemptions from registration for certain categories of organizations. In addition, organizations may be required to file periodic financial reports. State laws may impose additional requirements on fundraising activity involving paid solicitors and fundraising counsel. An IRS training document describes these requirements in greater detail. Charitable organizations may wish to contact the appropriate state agency to learn more about the requirements that may apply in their state, before soliciting contributions. In some states, municipal or other local governments may also require organizations soliciting charitable contributions to register and report.”

“In addition to registration and reporting requirements associated with the solicitation of charitable contributions, some states require organizations to register and file periodic financial results if they hold assets subject to a charitable trust.”


Tax Information for Charitable Organizations

FAQ’s directly from IRS website

Annual Information Returns

Donee Information Return

Information Provided to Donors

Report of Cash Received

Required Disclosures


Fun Fox Fact

Foxes are naturally nocturnal.  Don’t get kept up at night worrying about finances, use bylaws and sound financial procedures to stay safe!





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