PLANNED GIVING
GUIDE

Leverage financial instruments and technology to boost revenue for your 501(c)(3) organization

Learn how to attract qualified donors through your nonprofit website, focusing on Estate Planners and Donor Advised Funds engagement.

Introduction

Establishing a new mindset, recognizing broader opportunities and understanding regulations.

Pursuing new funding for your nonprofit is essential, but imagine accessing charitable dollars already earmarked for nonprofit causes. This three-part series explores how to shift your organization’s perspective from immediate needs to strategic financial planning, emphasizing the critical importance of revenue diversification. We will show you how targeted marketing strategies can accelerate your nonprofit’s digital evolution while building sustainable funding sources.

Repeat this like a mantra:

"Nonprofit" does not mean
"No Income"

Your 501(c)(3) designation opens additional opportunities for you to enhance your mission and make it a lasting reality. Charities need money to make money, just like any other enterprise. To champion your cause, your organization must generate income.

The most secure approach is to ensure that much of your revenue comes from related business activities such as membership dues, fees for services, publications produced by your organization, speaking engagements fees, classes, consulting, merchandise, galas, fundraising, ticketed events, and donations.

With that being said, some of the proceeds may become taxable depending on your jurisdiction so make sure to consult a legal and/or financial advisor before engaging into broader income generating activities.

Higher Asks, Larger Gifts

According to Americans for the Arts, funding for cultural nonprofits is a mosaic of sources; reliant on a delicate balance of 60% revenue, 30% private sector contributions, and 10% government support. (Coughlin, 2024)

While it is necessary to diversify your sources of income, what if you could also tap into broader funds and foundations that hold appreciating assets and higher capacity?

We are on the verge of the greatest wealth transfer in history. “The Great Wealth Transfer is poised to begin, with the baby boomers – who own about half the country’s wealth – handing over $84 trillion through 2045. Experts project that younger generations such as Gen X and millennials will inherit $72 trillion of that total, while charities receive the rest.” (Royal, J. 2024)

Whichever the motivation or reasons a philanthropist may have, they believe that a better society is possible. They want to ensure they get to see that their mark in that world yields benefits today.

“Many older adults are not waiting for their existential end to give. Instead, many are choosing a different strategy outside the traditional hand-offs of wealth memorialized in wills and trusts, they are choosing giving while living.”
(Coughlin, 2024)

Charitable Solicitation Compliance

State governments have established extra layers of scrutiny that are meant to protect their citizens while ensuring that their gifts and donations to charities and nonprofits, are used as intended, preventing abuse of the tax exemptions.

Almost all states require by law yearly soliciting certifications. There are minimum donation amounts that would trigger the certification requirement. In general, if you are soliciting donations, your organization must be registered first. The mere showing of a “Donate Now” button in your website -even if it’s intended to mobilize your local audience- may be seen as soliciting by another state and therefore requiring permit to solicit in that other state.

Only a handful of states including Puerto Rico, don’t have this requirement. As an example, a 501(c)(3) is required to be registered with the Department of State of Pennsylvania if it receives $25,000 or more in gross national contributions OR prior to compensating someone to solicit contributions from Pennsylvania residents regardless of where they incorporated. (Information for Charitable Organizations)

Your organization may choose to become compliant in specific states where you receive the bulk of your grants, donations, and gifts, but it is highly advisable to register in all states to maximize the opportunity factor while reducing the chances of litigation, daily fines, or audits.

There are several firms that can prepare, submit, and keep track of the yearly solicitation certifications for you in your state and/or nationally at a fee, like The Foundation Group and Harbor Compliance + Labyrinth, Inc.

Sources:

Coughlin, J. (2024, June 26). The Great Wealth Transfer Is Happening But Not In The Way You Think. Retrieved from Forbes: https://www.forbes.com/sites/josephcoughlin/2024/06/26/the-great-wealth-transfer-is-happening-but-not-in-the-way-you-think/
Royal, J. (2024, May 16). The Great Wealth Transfer: What it means for your money. Retrieved from Bankrate: https://www.bankrate.com/investing/the-great-wealth-transfer/
Information for Charitable Organizations. (n.d.). Retrieved from Commonwealth of Pennsylvania: https://www.pa.gov/en/agencies/dos/programs/charities/information-for-charities/-charitable-organizations.html