Montana Nonprofit Association

promoting a strong nonprofit sector in MONTANA

Principle: Fund Development

Nonprofit organizations play an important societal role as one vehicle for philanthropy. As an intermediary between donors and the community, nonprofits have ethical and legal obligations to fulfill donor intent and expend donated funds to further the organization’s mission. Nonprofits know and understand the law, and fund development is conducted according to the law and in keeping with the highest ethical standards. Nonprofits adopt clear policies to ensure all aspects of fund development are carried out legally, ethically, transparently and with integrity.

 KEY   ★★★ Legal Practices are legally required of all Montana nonprofits 
  ★★ Essential Practices are widely recognized as industry standards and generally expected of all nonprofits 
  ★ Recommended Practices should be considered by all nonprofits, with implementation dependent on capacity and life stage 

Practices

GENERAL 

1. ★ A nonprofit has a clearly defined, written fund development plan that guides fund development activities and that supports the organization’s comprehensive organizational plan. It is strategic and central to all organizational planning.


2. ★ A fund development plan includes goals, strategies, target audiences, time frames, tools, expenses, role assignments, and a means to evaluate results.

ETHICS, RESPONSIBILITIES, AND POLICIES

3. ★★ A nonprofit’s board and its executive leaders are familiar with the Association of Fundraising Professionals’ Code of Ethical Standards, available at www.afpnet.org and, through adequate management and supervision, ensure that all fundraising professionals acting on behalf of the organization adhere to these principles and standards. Anyone who is affiliated with or employed by the nonprofit who engages in fund development activities familiarizes themselves with the Code of Ethical Standards.

4. ★★ To foster and maintain the public’s trust, a nonprofit seeks funds to accomplish their work and only uses funds in the manner for which the funds were solicited. When appropriate, reserve accounts and endowments are established to support the financial sustainability of the organization and its mission.

5. ★★★ A nonprofit must honor the donor’s intent for their gift. To the extent that the donor’s intent is not compatible with and does not contribute to fulfilling the organization’s mission or if a gift cannot be so characterized or if accepting it will create problems or a mission conflict for the organization or its constituents, then the nonprofit must respectfully decline the gift. MT

6. ★★ Per their means, board members make personal financial contributions to the nonprofits they serve. In addition, board members engage in activities that raise and/or generate funds from external sources. Also in “Governance” 

7. ★★★ Fund development communications include clear, accurate, and honest information about the organization, its activities, and the intended use of funds. Fund development materials and other communications with donors, constituents and the public must clearly identify the organization. MT

8. ★★ A nonprofit regularly reviews and updates its fund development messaging to ensure it respectfully and thoughtfully reflects historic and current lived experiences of its constituents. 

9. ★★★ A nonprofit must comply with laws concerning Do-Not-Call Lists. Use of telemarketers are subject to additional regulation and prohibitions. MT, US

10. ★★★ A nonprofit must comply with all charitable solicitation laws (including registration if applicable) when soliciting funds from donors in Montana and other states. MULTI-STATE LAW

11. ★ A nonprofit adopts and regularly reviews policies that govern the acceptance, receipt, utilization, management, and disposal of charitable gifts and grants.

12. ★★★ A nonprofit must comply with disclosure laws regarding quid pro quo contributions when a donor receives something of value in return for a contribution. US

13. ★★★ A nonprofit must comply with laws concerning fundraising raffles or other games of chance, including reporting for tax purposes. MT, US

14. ★ The Association of Fundraising Professionals’ Code of Ethical Standards requires that compensation for fundraising personnel and consultants not be based on a percentage of funds raised or on other commission-based formulas. A nonprofit reviews and considers adopting a compensation policy in compliance with this Code.

ACCOUNTABILITY TO DONORS 

15. ★★ A nonprofit publicly recognizes charitable contributions and, at the same time, is mindful of maintaining donor confidentiality when needed and/or requested by the donor. A nonprofit reviews and considers adopting the Association of Fundraising Professionals’ Donor Bill of Rights to inform donor and organization expectations and policies with regards to donors and their contributions.

16. ★ A nonprofit practices appropriate donor stewardship. A nonprofit regularly communicates with donors regarding its activities and the impact of charitable support and makes that information available by multiple means.

17. ★ A nonprofit has a written policy that governs stewardship of donors and gifts. This policy addresses internal and public acknowledgement of gifts and donor information, a threshold for recognizing gifts, and the sale and/or sharing of donor information.

18. ★★★ A nonprofit must promptly acknowledge charitable gifts by providing donors with required federal gift substantiation and report subsequent dispositions of donated assets. US

19. ★ A nonprofit develops guidelines for use of funds donated by bequest for programs that are subsequently discontinued. Also in “Financial Management” 

ALTERNATIVE FUND DEVELOPMENT STRATEGIES 

20. ★ Nonprofits understand that contributed income may not fully fund its mission; therefore, nonprofits investigate opportunities to diversify their revenue sources.

21. ★ Decisions regarding alliances are consistent with the strategic goals of an organization; the impact on the brand and image of the organization should be positive. A nonprofit carefully considers how entering into strategic alliances will affect all parties involved. Strategic alliances are never made purely to meet funding challenges and are made only between competent, collaborative and functioning organizations. Also in “Strategic Alliances” 

22. ★ When considering alternative fund development strategies, a nonprofit analyzes the organizational, financial, and beneficiary impact along with its potential consequences to fulfilling its stated mission.

23. ★ In forming a joint venture or alliance, the parties actively clarify expectations, roles and capacity of the venture/alliance; consider the values, mission and brand; and create processes for conflict, resolution, recognition, promotion and future renegotiation of the venture/alliance. Also in “Strategic Alliances” 

24. ★ A nonprofit regularly evaluates all joint ventures and alliances in terms of revenue generation, opportunity costs and operational impact.

25. ★★★ A nonprofit must identify, report, and pay tax on unrelated business income. MT, US

 


Financial Management  ~  Governance and Leadership

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