Grants are a major source of funding for nonprofit industries. Thousands of available grants go unclaimed every year, so applying for funding through a variety of grants can be one of the most beneficial fundraising activities for a small nonprofit. Local sources of funding available in the form of city or county grants, and federal grants exist on the national level, as well. Grant writing is an essential skill for a new nonprofit organization.
Donations from local businesses and individuals, too, can serve the greater financial good of a not-for-profit organization, and should be considered an important aspect of the financial well-being of an NPO. Many times nonprofits are successful only because people come together and pool their resources. These resources can include anything from money to time to creativity. Depending upon the individual, he or she may wish to claim these donations as a charitable donation tax deduction. For any donations made to an NPO, there must be a receipt given to the contributor that includes the name and contact information for the NPO, as well as what was donated to the organization.
If the NPO’s application to the IRS is pending, as long as it has incorporated as an NPO in its state, it should be able to legally claim charitable donations deductions. Though it depends upon the specific laws and regulations in the state, most allow donations to NPO start-ups as deductions.
Donations can come from many sources or just one. However, when a single donor contributes a large amount of money, it is essential that the contributor does not receive any special treatment. While the donor may be recognized, as is the case when a memorial building is erected on a college campus or hospital, he or she cannot lobby the NPO in a way that is more influential or different from that of any other citizen or member of the organization.
