What Should a Nonprofit Expect to Raise?
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The Internal Revenue Services (IRS) reason for issuing nonprofits a tax exempt status is with the purpose that an organization is going to raise money from donors whether it be from individuals, corporate, a philanthropy initiative, in-kind contributions, or volunteers to offset its cost of providing it purposes. The IRS does not define whether the donation comes from individuals, donors or from corporate philanthropy giving. The act of donating and the manner under which it happens is up to the nonprofit. The nonprofit must however, follow any state guideline for the solicitation of funds from donors.
There have been many different opinions on what percent a nonprofit should raise from donors. There is even some debate of whether government funds should be considered part of that offset, which it currently is to be considered a public charity. However, there are several key examples that provide a guideline. The IRS mandates that an organization spend a minimum of 5% of it’s funds each year. The federal or state government has required a 10%-25% match or limited what the money can be spent on.
The reason largely lies in people’s understanding of the description of a non-profit. While non-profit companies are not in the business to profit from their activities, they are also not called “for-loss” organizations either. There is wide expectation of the need and understand that non-profit companies are under the same pressures as for-profit companies to operate as efficiently as possible to avoid loss in a down economy. A nonprofit being dependent on the philanthropic nature of corporations, individual donors and foundation does not mean that donations (capital) are to be used inefficiently.
The great majority of non-profit organizations are started with the lofty goal of improving or enhancing the lives of a specifically targeted group in their community, with services ranging from child day care for low income mothers to group homes for mentally disabled individuals to saving the environment. The leadership of the founding individuals of a nonprofit are the first donors to the nonprofit, volunteers and expected members of the philanthropic nature expected to be reached by the nonprofit. These non-profits serve a much-needed function around the state by picking up where government programs often fall short. Many of these organizations are small, serving a very specific segment of communities, allowing them the opportunity to truly get to know who their clients are, what the communities needs are and how best to serve them. Extraordinary people with an extra-ordinary desire to improve our communities run these non-profits, and who often dedicate and donating most much of their free time their whole lives to helping others or a cause.
