CAFAmerica Solutions for Fundraising in the United States

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					CAFAmerica Solutions for Fundraising in the United States
Overview

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U.S. Fundraising - Contents

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Who gives?
  U.S. Fundraising Individuals, foundations & companies
Tax implications for donors U.S. ―Friends of‖ Groups For charities – CAFAmerica ―Friends of‖ Charity Fund For donors

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Legal and technical aspects of U.S giving
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CAFAmerica solutions
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U.S. Fundraising – Who Gives?

The U.S. Fundraising Opportunity
     The U.S. has four times the population of Great Britain (295.7 million) located in 50 states. There are over 1.3 million charities in the U.S. UK private giving totals about £9 billion. The U.S. giving total is about $220 billion (approx. £120 billion) per year. 84% of the $220 billion charities receive comes from individuals, 12% from foundations and 4% from companies. A considerable amount of individual giving (40%) goes to religion, education and health. The average household giving to charity was $1,600 in 2000. 15% of private giving goes outside of the U.S. to foreign charities.

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U.S. Fundraising – Who Gives?

Individuals (84% of private giving)
  Vast sums of cross-border remittances (non tax deductible gifts) are made to hometown associations and charities by individuals from various Diaspora communities in the U.S. Individuals who make tax deductible gifts fall into a variety of categories (not necessarily mutually exclusive)  High Net Worth Individuals (incomes over $500K)  Employees of U.S. multi-national corporations operating in the UK  Dual U.S./UK taxpayers

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U.S. Fundraising – Who Gives?

Foundations – Private, Family & Community (12% of private giving)
     2-5% of proposals to foundations are accepted and funded. There has been significant growth in the establishment of private foundations in the last ten years. There are now about 54,000 private foundations. Very few foundations support infrastructure charities. Lots of funding supports issue areas such as education, health, environment, arts, etc. 1.3 million U.S. charities compete for funding in addition to charities overseas.

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U.S. Fundraising – Who Gives?

Turning to Companies (4% of private giving)
     Many U.S. companies and their employees give back to communities where they operate. This can be in the form of grants, products, or volunteer time. The focus of grant making can be local, regional, national and international. Employee preferences often help in part to drive a company’s policy to give locally. Employee donations and volunteer hours are often matched financially by companies. Corporate grants can be one-off or multi-year (3-5 years max). They can be for general support, a specific project, or be in the form of working with charities as a partner investing in issue areas such as urban renewal. Grants may be organized from the company’s U.S. headquarters or foundation and/or through a local or regional office.

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U.S. Fundraising – Technical & Legal

Technical aspects of giving
   The United States tax code only permits a tax deduction for a foreign gift/grant if it is made to a charity organized in the U.S. Further restrictions apply to companies and approximately ¾ of grants made from companies are domestic. An intermediary public charity like CAFAmerica, which is a U.S. domestic public charity, has rules governing its ability to make grants overseas that are less burdensome than those for a company or private foundation. A public charity is typically supported by a broad cross section of the public. A private foundation is generally funded by a single source of income such as a family, individual, endowment or company.

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U.S. Fundraising – Technical & Legal

Tax implications for U.S. donors
 In order to receive a grant or donation from an individual, company, or Foundation that is tax deductible for the U.S. donor, your charity must be deemed as equivalent to a U.S. nonprofit by the IRS. Applying to the IRS to obtain equivalency is often complicated and expensive. Applying for eligibility to receive grants from CAFAmerica is a simpler way to receive grants from the United States. U.S. individuals cannot, under law, make a tax deductible gifts directly to a foreign charity. All grants from CAFAmerica are tax deductible for the original U.S. donor because CAFAmerica is a U.S. public charity.

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U.S. Fundraising – U.S. ―Friends of‖ Groups
“Friends of” Groups – U.S. 501(c)(3) equivalency
• • • • • U.S. taxpayers can only receive a tax benefit if they give to a U.S. 501(c)(3) (public charity). U.S. companies and foundations can use an affidavit to determine your ―equivalency‖ as a 501(c)(3) with the IRS. Equivalency with the IRS requires proving that 1/3 of income is from the public and government combined. Sometimes a charity seeks to set up its own dedicated 501(c)(3) in the U.S. so it can attract donations. These groups are typically called ―Friends of‖ Groups. American ―Friends of‖ do NOT have a separate tax classification – it is impossible to know how many exist. ―Friends of‖ Groups typically support one or more foreign organizations. Probably thousands exist. They are established and registered under the IRS tax code. Foreign charities need legal counsel or a specialist lawyer in the U.S. to set up a ―Friends of.‖ It will have its own trustees, by-laws, governance and meetings according to U.S. law. Costs between £5-16K to set up. 9

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U.S. Fundraising – U.S. ―Friends of‖ Groups

U.S. “Friends” groups – Limitations (raised by UK charities)
• • • • • • • • • Finding and managing an independent Board of Directors/Trustees in the U.S. Establishing structure and by-laws. Getting donations back to the UK parent charity. Running a charity 3,500 miles away. Incorporating at State and Federal level. Registering in all 50 States for fundraising each year. U.S. ―Friends of‖ Groups must maintain control over gifts to issue tax receipts. Administrative burdens to grant-making are rarely appreciated at the start. U.S. ―Friends of‖ group are only profitable if at least £10 million a year is raised from the U.S. given the costs and legalities that exist around international grant-making.

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U.S. Fundraising – CAFAmerica Solutions
CAFAmerica and giving – Grants to foreign charities
    By becoming ―eligible‖ for four years with CAFAmerica, we can make a grant to you on behalf of a U.S. company or Foundation without having to establish IRS equivalency. Grants to foreign charities are ―suggested‖ to CAFAmerica by the donor. Grants made by CAFAmerica are at the discretion of the CEO and President of the Board of Directors. CAFAmerica procedures for making grants are governed by U.S. Law. CAFAmerica may be unable to honor a donor’s ―suggestions‖ if: the charity’s eligibility with CAFAmerica has expired, no grantee report has been submitted for grants made in the previous year, the charity and/or its trustees are on an anti-terror list, a money laundering concern arises involving the charity. CAFAmerica is occasionally forced to reject grants to foreign charities where there is a real concern of money laundering or terrorist support. The vast majority of grants ―suggested‖ to CAFAmerica are approved.

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U.S. Fundraising – CAFAmerica Solutions
CAFAmerica “Friends of” Charity Fund – Key Benefits
    Enables charities to launch and maintain a U.S. fundraising appeal while saving the expense and trouble of registering in the United States and administering your own U.S. organization. Allows your charity to accept tax-deductible donations of any size from U.S. taxpayers. (In contrast, individual donor advised grants to CAFAmerica must meet a $500 minimum.) Provides a cost-efficient way to manage U.S. fundraising for charities receiving numerous gifts from U.S. donors each year. Allows your charity to benefit from a range of CAFAmerica premium services as part of your membership, including: U.S. fundraising information and advice (included in the ―Friends of‖ Charity Fund Starter Pack); fund set-up; online fund management; due diligence; and quarterly grants. Offers access to CAFAmerica fee-based Advisory Services for additional guidance and assistance on U.S. fundraising.

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U.S. Fundraising – CAFAmerica Solutions
CAFAmerica “Friends of” Charity Fund – How It Works
   CAFAmerica ―Friends of‖ Charity Fund is a Donor Advised Fund that allows non-U.S. charities to collect taxdeductible contributions from U.S. donors. Charities sign a ―Friends of‖ Charity Fund agreement with CAFAmerica to establish and name their fund. Member charities receive a special ―Friends of‖ Charity Fund Starter Pack with information about the fund and other CAFAmerica services, plus guidance from CAFAmerica on fundraising in the United States. U.S. donors may use the CAFAmerica gift form (available at www.cafamerica.org) to deposit contributions of any amount into a charity’s ―Friends of‖ account at any time.* Donors receive a tax receipt for their contribution from CAFAmerica. CAFAmerica administers the fund and makes grants to member charities on a quarterly basis.** Each charity has secure, password-protected access to its ―Friends of‖ Charity Fund via www.cafamerica.org to check balances and grants in real time. Member charities are invited to take advantage of CAFAmerica fee-based Advisory Services to develop additional ideas and strategies for reaching U.S. donors. Member charities also can benefit from CAF in the UK efundraising services to take the pain out of managing their fundraising online (for more information, go to www.efundraising.org).
* All gifts to CAFAmerica become the property of CAFAmerica, which has the ultimate control, authority and discretion with regard to its assets and grants. ** At CAFAmerica’s discretion, grants may be made more frequently—for example, in the event of a large gift to the charity. Fund balances do not earn interest for member charities.

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U.S. Fundraising – CAFAmerica Solutions

CAFAmerica solutions for donors
International Grant making services: The CAF American Donor Fund (CAFDF) – For dual U.S./UK taxpayers. Donor Advised Gifts (DAG) – Single gifts. Donor Advised Funds (DAF) – Funds for companies, foundations and individuals. Matched Donor Advised Funds (MDAF) – Funds for companies for employee matching.

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International advisory services: Donor advice and program support for different donor types. Due diligence service for companies.

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U.S. Fundraising – Contact CAFAmerica

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Chief Executive Officer - Susan K.E. Saxon-Harrold email susnsh@cafamerica.org

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Grants Officer - Chani Robinson Grants support email crobinson@cafamerica.org
Grants Associate - Samantha Dutill Foreign charity eligibility email sdutill@cafamerica.org

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