Most fundraising groups go into fundraisers knowing exactly what they want or need to spend their profit on. Having that goal is of course very helpful to boosting the success of the fundraiser.
When it is all said and done though, and it comes time to disperse and spend fundraiser profits, fundraising committees sometimes find themselves a little unsure of where to start. Responsible spending of fundraiser profits requires planning and examination. Be sure to work closely with your tax adviser, so you’ll be able to take advantage of any new tax laws and get the most out of your hard earned profits.
Determine how much is really profit
Before you can spend fundraiser profits, you have to carefully examine fundraiser records and receipts and decide how much cash you can actually spend, and isn’t owed to any vendors for example, or other creditors:
- Determine both major and incidental costs of everything, including all supplies
- Make sure you have cleared all debts/receipts and paid all reimbursements
- Know how much of your profits is committed elsewhere:
– Do you need to deposit a certain amount into an organization account?
– Does a certain amount go to a PTO or other partner?
– Is money to be contributed to individuals or scholarships?
- Know how much needs to be saved or paid to cover any tax responsibilities (if you do not know, consult your group’s tax adviser)
Save for the future
It’s great to have big money to spend on the never-ending needs of your organization, but starting every year at zero makes it harder than it needs to be:
- Allocate a certain amount or percentage to fund future fundraisers, such as pre-buying product. This opens bigger and better options for future fundraising campaigns.
- Allocate a certain amount or percentage to fund larger organization projects and interests
Spending your fundraising rofits
Spend fundraiser profits responsibly to stretch your hard-earned dollars as far as possible and retain as much as possible for other/future projects:
- Know your tax exemption status. If you are tax exempt, you should have an ID number which you can present to retailers and suppliers so you don’t have to pay sales tax. This can be a big savings, especially on big-ticket purchases.
- Shop around. There are many suppliers waiting to sell to you. Keep in mind, that just because a seller may be a ‘school supply’ they may not have the best prices. Get quotes from several sellers and let them know you are shopping around.
- Ask for a discount. For a good cause, you’ll often find a retailer who is willing to cut the price and give you a good deal.
Having a little something left over for flexible purchases and future fundraisers is a good thing, but you’ll want to talk to a tax adviser about it. Depending on your organization, your tax exempt status, and the amount of excess funding, you may need to spend money within a certain time frame (before year’s end) in order to avoid taxes and penalties. At every step, having a good tax adviser will ensure smooth sailing when meeting tax responsibilities and allocating and spending fundraiser profits.
Find more articles like this one in our ABCs Of Fundraising category.