Fundraising

This page is an encyclopedia article on fundraising; for fundraising on Wikipedia, see our fundraising page, or read about how we use the money.

Fundraising is the process of soliciting and gathering money by requesting donations from individuals, businesses, charitable foundations, or governmental agencies. Although fundraising typically refers to efforts to gather funds for not-for-profit organizations, it is sometimes used to refer to the identification and solicitation of investors or other sources of capital for for-profit enterprises.

Fundraising is the primary way that non-profit organizations obtain the money for their operations. These operations can involve a very broad array of concerns such as religious or philanthropic groups such as research organizations, public broadcasters, and political campaigns. When special events are arranged to raise funds, they are often known as fund drives, pledge drives, or, sometimes when television is involved, telethons.

Many non-profit organizations take advantage of the services of professional fundraisers. These may be paid for their services either through fees unrelated to the amounts of money to be raised, or by retaining a percentage of raised funds. The latter approach is expressly forbidden under the Code of Ethics of the Association of Fundraising Professionals (AFP), the profession's primary international support and regulatory body.

Many non-profit organizations nonetheless engage fundraisers who are paid a percentage of the funds they raise. In the United States, this ratio of funds retained to funds passed on to the non-profit is subject to reporting to a number of state's Attorneys General.^[1] This ratio is highly variable and subject to change over time and place, and it is a point of contention between a segment the general public and the non-profit organizations.

Some examples of charitable organizations include student scholarship merit awards for athletic or academic achievement, humanitarian concerns, disaster relief, human rights, research, and other social issues.

Equally important are fundraising efforts by virtually every recognized religious group throughout the world. These efforts are organized on a local, national, and global level. Sometimes, such funds will go exclusively toward assisting the basic needs of others, while money may at other times be used only for evangelism. Usually, religious organizations mix the two, which can sometimes cause tension.

Fundraising also plays a major role in political campaigns which, despite numerous campaign finance reform laws, continues to be a highly controversial topic in American politics. Political action committees (PACs) are the best-known organizations that back candidates and political parties, though others such as 527 groups also have an impact.

While public broadcasters are completely government-funded in much of the world, there are many countries where some funds must come from donations from the public. Pledge drives commonly occur about three times each year, usually lasting one to two weeks each time. Viewership and listenership often declines significantly during funding periods, so special programming may be aired in order to keep regular viewers and listeners interested. (Commercial television interestingly has a similar situation to this, known as sweeps).

Fundraising organizations in the United States are often established for charitable purposes and are given a specific designation by the Internal Revenue Service, noted as 501(c)(3), as a charitable nonprofit organization. These fundraising organizations must outline a mission statement, which states its main purpose and objectives and its overall policies. A major organizations will list the programs in which it is involved, the kind of funding it receives, and how it allocates its expenses. In addition these organizations are rated annually for both efficiency and compliance by the American Institute of Philanthropy and other watchdog groups.

Many non-profit organizations receive some annual funding from a financial endowment, which is a large sum of money that is usually invested to generate a sizable amount of interest each year. Endowments are generally created when a sizable gift is received from an individual or family, often as directed in a will upon the death of a family member. Corporate entities also may also contribute to endowments, which are often handled by charitable organizations known as foundations.

While fundraising often involves the donation of money as an out-right gift, money may also be generated by selling a product of some kind, also known as product fundraising or in-kind gifts. Girl Scouts are well-known for selling cookies in order to generate funds. It is also common to see on-line impulse sales links to be accompanied by statements that a proportion of proceeds will be directed to a particular charitable foundation.^[2]

Some prominent charitable fundraising events

• Band Aid (1984), Live Aid (1985) and Sport Aid (1986), for famine relief in Ethiopia
• the annual Terry Fox Run, in honour of Terry Fox, for cancer research in Canada
• Red Nose Day in the United Kingdom

External links

• Association of Fundraising Professionals
• Fundraising Articles and Resources at About.com
• American Institute of Philanthropy
• Better Business Bureau
• Charity Navigator
• Fundraising Institute - Australia FIA) is the professional association for individuals responsible for fundraising and developing philanthropic support for a wide variety of Not for Profit, charitable organisations, throughout Australia.
• Discussion forum and mailing list, primarily university
• Association of Fund-Raising Distributors & Suppliers - a not-for-profit trade association with information on raising funds through product sales.

Notes and References

1. ^  For example, Active Charity Promotions in Kentucky. URL accessed on October 9, 2005.
2. ^  This is an example and not an advertisement. See the fine print at the bottom of this website, which states "The Foundation for American Veterans and The Lance Armstrong Foundation will receive 25% of all profits from the sale of their items." InActSys Provides Hardware & Software Solutions for Business. URL accessed on October 9, 2005.