Track the numbers: This goes without saying for individuals, but it’s even more critical for organizations. Keep tight records on total contributions, grants, and gifts received.

Know who’s giving: Large contributors (individuals whose total contributions during the most recent four years are greater than or equal to two percent of the organization’s total contributions over that same period) should receive specific emphasis. Take note of every person or group that contributes to your organization, even the small ones – you never know who will turn into a large contributor!

Record your expenses: Promotion, administration, fundraising products – it’s all money well spent, but the IRS needs to know HOW you’ve spent that money. Keep those receipts and keep them sorted out into proper categories.

Stay up to date: Tax laws are a changing beast, and it’s good to have at least one expert on staff that can stay familiar with how and why things change from year to year. Like the Boy Scouts say, be prepared.

As with all tax-related legal issues, fundraising tax laws are constantly evolving over time. In some cases, organizations may have to face industry-specific rules (e.g. non-profit hospitals and their charity rule requirement). The best bet? Educate yourself on the basics of fundraising tax law, then consult a CPA to prepare your financials.

When you run a not for profit organization or other type of firm that needs funds raised by methods other than retail sales or other types of financial transactions, chances are you will be involved in the world of fundraising. A fundraiser is often time a fun event and one that is very important for you because it provides potential donors with a specific moment and cause for which to donate funds to you. Also, when it comes to money, you need to be highly organized and make sure that the event does not become too difficult for you to handle and that the funds being raised surpasses the cost of the event itself. For this, you need good book keeping and below are four tips to help you achieve in this area.

-Unless you are soliciting donations of which the amount is freely chosen by the donor, come up with a specific donation amount that people can give. In this scenario your book keeping can be largely uniform and easy to comprehend. Also, inviting the opportunity for donors to choose their own amount can cause time wasted if they are giving too little and your costs are not met. The only downside to discouraging these types of donations is you might not receive a very large and generous sum that a person might otherwise give to your cause.

-Make sure that all necessary personal information is recorded from the person giving you a donation. Should their donation be ill conceived, a check they write bounce or another problem arise, you need to know exactly who is giving you what and how to be able to keep track of them should a legal problem arise. Lack of information and documentation could spell disaster in some cases like this.

-Monitor your donations and costs being invested into the event very often, such as once a day or two times a week. Staying on top of the cash flow can alert you to any problems that arise such as costs not being met, funds being lost if you are renting a space or paying for professional fundraisers in a situation where you are not getting sufficient donations. These types of situations going unchecked can not only fail your fundraising efforts but also put you into financial ruin which should never be the outcome of a fundraising effort.

-Use good computer software to do the book keeping for you. While some information input will always be required from you or an employee, the computer software can do much of the mathematical work behind book keeping that we might sometimes make a mistake on or otherwise skew without realizing it. Also make sure book keeping information is backed up onto a remote hard drive in case your computer system goes down and the initial information is lost. You can also print out reports just to be safe.

So you see, good book keeping is key when having a fundraiser. Never risk your funds raised by an accident resulting from bad record keeping!

For example, in Washington, D.C., organizations are required to register and receive a certificate of registration at least 15 days prior to soliciting contributions. In Maryland, organizations are required to register unless they do not receive contributions in excess of $25,000 in a year and all fundraising activities are performed by volunteers, not paid staff. Most states do not require organizations to register if they are only soliciting donations from their members.

Information frequently required for registration includes:

• names and addresses of officers, directors, and trustees;
• a recent financial report;
• a description of the organization’s purpose(s); and
• information on how the funds are intended to be raised, including whether any outside fundraising professionals or consultants will be used.

Following registration, organizations often are required to file an annual report with the state. At the time of solicitation, specific disclosures, such as the fact that information about the charity is on file with the state or that professional fundraisers are being used is often required. States may not require an organization to disclose the amount or percentage of funds rose that will be targeted for fundraising expenses.

To make compliance easier, some 35 jurisdictions (34 states and the District of Columbia) have come together to develop a Unified Registration Statement. Using this one form, available at www.nonprofits.org , your organization may register in these 35 jurisdictions. Before you get started, however, it’s a good idea to determine the states in which your group will be raising funds from the public and look at the registration and disclosure requirements of those states (see the appendix of the Unified Registration Statement for state-by-state information).

Fundraisers may also be subject to a variety of other state laws, including prohibitions on fraudulent advertising. In some states, a fundraising appeal needs only to be capable of deceiving to violate these laws. More information about these statutes may usually be obtained by contacting the state attorney general’s office.

(Information from http://www.nonprofitlaw.com/)

Some helpful links:

• Fundraising tax law by state
• Download State Liability Laws for Charitable Organizations and Volunteers for Free: (PDF: 118 pages / 815kb)
• Publication 4220, Applying for 501(c)(3) Tax-Exempt Status, is designed to help prospective charities apply for tax exemption under the tax law.
• Publication 4221, Compliance Guide for 501(c)(3) Tax-Exempt Organizations, explains the record keeping, report filing, and disclosure rules that apply to organizations that have tax-exempt status under section 501(c)(3).