Category Archives: Nonprofit Fundraising

Charity Navigator Eases Pressure on Nonprofits to Show Minimal Overhead

starsA back-end change to the rating system metrics used by a watchdog organization for nonprofits may not sound like a big deal, or make for snazzy headlines. But the recent announcement by Charity Navigator that it is “upgrading” the way it evaluates charities and ultimately decides how many “stars” each one merits (one a one to four scale) represents a huge change in attitude, and one that will hopefully trickle down through the entire philanthropic community.

The main change to which I’m referring is in the way Charity Navigator will evaluate a nonprofit’s so-called “administrative expenses” going forward.

Currently, only charities that can claim to have no overhead expenses at all can earn Charity Navigator’s top score for that particular measurement, or ten points. Unless yours is an entirely volunteer-run organization, or never has to actually ask donors for financial support or hire people to handle accounting, development, or other management, that’s almost impossible to achieve.

Under Charity Navigator’s newly announced system, a nonprofit can score ten points if it comes within a given range of overhead expenses, taking into account the type of organization.

It’s a change that seems infinitely more realistic. For years, commentators have noted that, while excessive overhead may mean that someone is lining his or her pockets, some level of overhead is a necessary part of simply running an organization. (What for-profit corporation exists without management?!)

A quote in The York Times sums it up nicely: Elizabeth A.M. Searing, assistant professor at the Rockefeller College of Public Affairs & Policy at the University of Albany and a member of the Charity Navigator task force, explains that the change will make it easier for charities to avoid having to “starve themselves” so as not to appear as if they are spending excessively on overhead.

Yes, Even Charitable Organizations Must Abide By U.S. Trademark Law

pillowfightPlanning a fun theme for a special charity event is an opportunity to exercise one’s creativity, attract a new audience, and . . . receive future nasty letters from lawyers.

Just ask Newmindspace, a Toronto-based nonprofit dedicated to organizing free, fun, all-ages events in places like subway cars and city streets. The organization had to change the theme of its popular lightsaber battles to the “Cats in Space Tour” after receiving a cease-and-desist letter from the attorneys at Lucasfilm (owner of the Star Wars brand).

At least the nonprofit seems to have come to an agreement without going to court or suffering direct financial losses (other than the costs of hiring its own lawyers and rebranding). A worse fate appears to have been a possibility: Newmindspace co-founder Kevin Bracken reportedly said that, after receiving the letter, the threat of a multimillion-dollar lawsuit kept him up at night.

Still, it’s a cautionary tale for any nonprofit. How do you make sure not to step on any toes?

First, understand that simply being a nonprofit is not a defense. It might help in certain situations (particularly if you’re such small potatoes that it’s not worth the larger entity’s time to go after you), but you can’t count on that. In fact, giant, unfeeling corporations aren’t even the only ones to go after trademark violators: Remember the reports of the Susan G. Komen foundation sending its lawyers after smaller charities that try to use the phrase “For the cure?”

Fortunately, simply developing some awareness of the existence of trademark and copyright laws, and how they work, will go a long way toward protecting your nonprofit from missteps.

Briefly summarized, trademark infringement occurs when someone uses the trademark or service mark of another when selling competing or related goods and services; particularly if the use might cause confusion for the average consumer. (See Nolo’s articles on Is It Trademark Infringement? for more on this.) If you’re hoping to piggyback on the success of a theme, character, or design that someone else came up with an is actively using, better think twice.

Relatedly, a copyright violation occurs when someone reproduces, distributes, adapts, or performs a work (art, literature, theatre, music, and so on) whose creator still owns the rights to it. As Nolo author Rich Stim explains, “Some people incorrectly believe that if the purpose of the infringement is not for profit, there is no infringement. For example, if a nonprofit charity uses a copyrighted character in its donation drive and mailings, the charity may be liable for infringement.”

Thankfully for Newmindspace, no one seems to have claimed trademark protection for its most popular event: International Pillow Fight Day.

Forty Cent Difference Between 2016 Business and Charity Mileage Deductions

The IRS actually lowered the amount per mile that a business owner can deduct for vehicle use in 2016. (See 2016 Standard Mileage Rates for Business, Medical and Moving Announced.) The standard mileage deduction went from 57.5 cents for 2015 to 54 cents.

The amount that a volunteer using a car for charity can deduct in 2016 stayed right where it’s been for years, at 14 cents per mile. So relatively speaking, the volunteers are a little better off than they were last year. After driving hither and yon to set up a charity auction, visit shelter dogs and cats (and birds, and reptiles . . . ), clean up a shoreline, and so on, they’re only an even 40 cents worse off per mile than had they been driving the car for business purposes.

Does the IRS hate charitable work? No, the difference is based on a technicality. The charitable mileage deduction is set by federal statute, which would take an act of Congress to change. Congress never seems to get around to that particular fix.

The standard mileage rate for business, by contrast, is within the IRS’s power to change. The agency announces a new rate annually, based on the latest fixed and variable costs of operating an automobile.

If you’re volunteering for charity and using your car to get you to the facility and back, or for other purposes related to your volunteer work, and you want the maximum deduction, you might want to do it the more laborious way: keep track of your miles, and figure out the per-mile cost of gas and oil, as directly related, variable expenses. (General wear and tear can’t be included for the charitable mileage deduction.) See IRS Publication 526, Charitable Contributions, for details (under “Out-of-Pocket Expenses in Giving Services”).

And if you’re a leader or manager of a charitable or nonprofit organization, be sure to remind your volunteers about the tax deductions they can take for expenses they incur. Not only mileage, but other expenses they pay for out of pocket (aprons, treats for kids, pets, or other clients, art supplies, and so forth) can be deducted.

Will Your Nonprofit’s Crowdfunding Campaign Actually Attract a Crowd?

social-mediaOnce considered a marginal activity used mostly by individuals struggling to fund their short film or medical care, crowdfunding (setting up short-term giving campaigns on sites like Kickstarter or Indigogo) has become a necessary and normal part of any nonprofit’s fundraising activities. Devin Thorpe, author of Crowdfunding for Social Good, has been widely quoted as saying, “While crowdfunding does not constitute a complete development plan, no development plan is complete without crowdfunding.”

But the secret to this method is not, as one might imagine, in attracting a crowd of strangers from near and far. One of  the 10 Crowdfunding Tips From The 2014 Nonprofit Technology Conference posted by  was that, “Contrary to what you may assume, the majority of donations for crowdfunding first come from people that you know.”

Makes sense, when you think about it. With the world getting a bit, well, crowded with crowdfunding campaigns, the odds of someone pitching in on your nonprofit’s effort when they’re busy reading solicitations for people and causes much closer to home seem small.

That’s not to say a nonprofit shouldn’t try to attract a crowd. The campaign itself can be a way to raise visibility, as friends forward the links to friends. It may give viewers a window into your group’s immediate needs, whether they end up giving or not. And to maximize the campaign’s effectiveness, you can find many free crowdfunding resources online.

There’s one more thing to think about if your nonprofit does succeed in attracting supporters from far away, however: state registration requirements. As attorney Gene Takagi notes, crowdfunding “potentially exposes the organization to the jurisdiction of every state where it is deemed to engage in charitable solicitation based on its crowdfunding efforts.” And according to Nolo author Stephen Fishman, most states “require nonprofits that solicit contributions from state residents to register with a state agency.”

This registration process can be a pain—which is why Nolo teamed up with National Corporate Research, Ltd. (NCR) to produce Nonprofit Fundraising Registration: Nolo’s 50-State Digital Guide, coauthored by NCR’s Ronald J. Barrett and Nolo’s Stephen Fishman. It’s available for just $124.99 annually and will be updated quarterly with new links, changed forms, and the latest information on registration rules and requirements.

Over One Fourth of Millennials Avoid Social Media

usmailJust when your nonprofit was starting to get comfortable with posting regular communications on social media, for the presumed sake of reaching all those tech-savvy millennials (age 20 to 35), we get this little reality check:

An estimated 27% of millennials are looking the other way. If they even have a Facebook account (Facebook being the most popular social media tool used by this group), they check it only once a week. This is according to research that Battery Ventures, a global, technology-focused investment firm, commissioned from Ipsos, an independent market-research company.

What’s more, this survey (of 1,000 people within the target age range) found that a majority (54%) said they don’t have a Snapchat account, around 41% don’t have accounts with Pinterest, 39% aren’t on Twitter, and 39% abstain from Instagram.

This doesn’t undermine the basic importance of social media. It may still reach a majority of your prospective millennial supporters, and they may share it with their online friends, and so on. Still, your nonprofit may not want to abandon those seemingly old-fashioned snail mail appeals and printed newsletters just yet.