The Nonprofit FAQ

Is it possible to raise money with $0 fundraising expense?
The American Institute of Certified Public Accountants (AICPA) publishes Technical Practice Aids (TPAs) to answer key questions about reporting financial information. TPA 6140.20 (issued in July 2007) deals with how fundraising expenses should be accounted for.

(The text of the TPA is available at https://www.aicpa.org/download/acctstd/TIS6100_21_22.pdf.)

The TPA asks if it is possible for a nonprofit organization to report contributions but only have minimal or no fundraising expenses.

The TPA comments that it would be “unusual,” but does list several circumstances where this situation could occur:

  • Donors contribute to the charity without the charity undertaking fundraising activities because of name recognition or custom
  • Fundraising activities related to those contributions are conducted entirely or almost entirely by volunteers whose contributed services do not meet the recognition criteria for contributed services in paragraph 9 of FASB Statement No. 116
  • Other organizations that the charity does not control contribute to the charity with the charity undertaking minimal or no fundraising activity or other participation in relation to those contributions


(But, when considering the last of the examples, remember that earmarked contributions received through intermediaries such as federated campaigns must be reported at the full amount of the donation, even if the intermediary deducts a fee or service charge. The deduction is reportable as a fundraising expense.)

The TPA offers some examples: A religious organization might receive funding solely through tithing. An organization that has no paid staff or compensated board members may conduct all of its fundraising through nonprofessional volunteers. (The time of volunteers performing activities that would normally be compensated is supposed to be reported as an in-kind contribution matched by an in-kind expense). A private foundation may receive support through family members with no solicitations necessary.

A significant number of nonprofits that report to the Internal Revenue Service (IRS) and other regulators have been found to show significant contributions and no fundraising expenses.
This pattern raises policy makers' concerns about the integrity of nonprofit financial reporting and may also, of course, damage the credibility of the organizations who submit such reports.



Posted 2/23/08 -- PB