Sat 14 Feb, 2004 10:35 am
I have mentioned a few times that I am in charge of fundraising for a major event. It's going OK, I am fairly optimistic, but it is not going nearly so well as I had hoped, for a variety of reasons (including rampant incompetence on the committee).
My question is, IF we do not have enough money to cover costs when the event actually happens, who is liable? We are a 501 (c) 3 (nonprofit) organization. I am the "fundraising coordinator", there is a chairperson and a business manager. I haven't signed any contract or any of the official paperwork.
Again, hopefully it won't come to that, but one of those late-night "eek!" thoughts...
you could have a lien on your organization.
They do have non-profit insurances in order to protect the board and officers. Its not too expensive.
My off hand thought is that only officers and board members could actually get stuck with any liability, and then only if actually guilty of wrong doing. That's one of the major reasons for incorporating, and mere incompetence shouldn't be sufficient to penetrate the corporate shield. Now, if the financial condition of the corporation were misrepresented to lenders or vendors, the individuals might indeed find some personal liability.
Disclaimer - Doctors, lawyers, and accountants can incorporate for tax purposes, but the liability is still personal. That's not what we are talking about here.
Soz you'll be ok but it's a shame that the incompetence of committee could cause so much harm to the cause you are working hard for. Does this group have a lawyer for advise? They should and they better be using him or her pronto.
Ok, thanks guys. I still have a very shaky understanding of this whole aspect. Can you walk me through what happens if we have $10,000 left in our coffers and we need to pay the hotel $20,000?
Soz, what costs are you afraid you won't be able to cover? If for example, you have booked a hotel banquet room or catering, you might want to renegotiate the contract a few weeks prior to the event. Change the menu, or rent less pricer stuff.
Because this is for a worthy charity, some of the suppliers or vendors of your "cost items" may be willing to lower or offer your organization a reduced price as well.
Ultimately, I was thinking of corporate bankruptcy. Still, don't let the signature on the credit application be by anyone other than an officer of the corporation.
It's more general than that -- I used the hotel thing as an example.
Basically, the event will cost approximately $150,000, for the hotel, honorariums to presenters, travel costs, souvenirs, payment for performers/ entertainment, etc., etc. When I first started fundraising, the total cost was estimated as much lower, and I was supposed to raise $20,000. I have raised $16,000 so far, with several things in process. But the budget keeps moving and ballooning in one way or another. For example, a major fundraiser that I developed but was organized by the whole committee as a "dress rehearsal" ended up LOSING money rather than earning the several thousand dollars that it was supposed to. My part, the silent auction, went well, but not nearly enough tickets were sold to the event as a whole cover the (exhorbitant IMO) costs for the entertainment, etc.
At any rate, registration to the main event in May costs approximately $150, and if there are enough registrants, we're fine. But that was just what sunk us for the fundraising event -- not enough tickets were sold (the prices were ridiculously high, again IMO, $75 x 100 is more than $50 x 100, yes, but $50 X 250 is a heckuva lot more than $75 x 100... but I digresss...) -- and I am starting to think of "what if's." IF enough people register, we can cover costs. IF they don't, and I don't get much more fundraising $$...?
I am working on an email to the group now to pursue what you say there, trying to get reductions or donations of goods and services, the things we would be spending money on.
But still curious about worst-case scenario. IF we don't have the money, then...?
even as a 501 3c , you are responsible for financial obligations. As ceili said, try the renegotiation aspect if you feel costs may over income. The hotel probably is not able to book another event at such short notice , so you may be able to do
renegotiate rates, menus, etc
renegotiate a payment schedule.
apply for a grant for shortfalls. (Im assuming that this is a hearing impaired function which may be eligible for AWD grants)
Tell me about the shortfall, too... if I apply for grants now, the event happens in May, and the grant comes through in September, say, what are our options? Can we put off those who are requesting/ requiring payment?
americans with disabilities
the grants are "In partial fullfilment of financial responsibilities and obligations applied toward (name of event) discuss the merits of the program and expected income and the fact that any moneys not actually required in meeting these obs will be feturned. You can
apply for grants in that fashion. Ive done it for nature and watershed orgs and we seek a grant that is like a bridge loan . We meet obligations through a grant and get funds through the year. its sort of like a business line of credit, where you are obligated to zero it out yearly or at some other schedule that you negotiate.
Cool... any links on where to find these sorts of grants? (The ones I have found so far are much more specific... I'm pursuing them, to be sure, have gotten one so far.)
Ill ask a friend who is a grant coordinator for a Christian Hospice.
I think you will have better luck getting a grant for the program vs. putting on a findraising event.
I'm surprised your organization made a committment for so much money for an event that was such a big gamble. As far as I know, your organization will be liable for the total cost of the event for the 'contracted' price. I worked for nonprofit organizations for 18 years of my short career, and all of our fund raising events were never gambles. All the events held at hotels were sold on the basis of how many tickets sold - not on some unknown future sales. In other words, the hotel charged per seating whether we had 100 or 500 people. As the Director of Administration, I have always advised board members to buy liability insurance through their property insurance. I now purchase a $1 million dollar umbrella insurance policy that costs less than $300 per year. It's worth the peace of mind.