Fund Raising Contracts

The Fund-Raising Contracts - Once you've selected a professional fund-raiser, describe the details of the campaign in the written contract to protect you as well as the fund-raiser. Keep in mind that donors ordinarily expect that most of their contribution will go toward programs and services.

The contract should:

  • explain the services to be provided and the financial responsibilities of each party;
  • authorize or prohibit the use of subcontractors;
  • identify the compensation to be paid - a flat fee and/or a percentage of the money collected. Remember that some watchdog organizations have standards that limit overall fund-raising costs;
  • require that the fund-raiser use only material reviewed and approved by your organization when contacting the public, especially telemarketing scripts and printed materials mailed to donors. Descriptions of your organization and representations about the tax benefits of a donation must be accurate: make sure any description as to how the money will be used is consistent with the organization's current plans and objectives;
  • specify the contract period, including the closing and settlement dates;
  • require the fund-raiser to agree to comply with the FTC's Telemarketing Sales Rule and applicable state laws;
  • outline cancellation criteria for both parties;
  • require the fund-raiser to provide detailed reporting of results throughout the campaign and at its end. All donor checks should be made out to your organization, not the solicitor. Do not allow the solicitor to endorse checks. Review sales and other financial records on a regular basis, perhaps weekly;
  • specify ownership of donor lists. Typically, lists belong to the nonprofit. If you retain ownership and decide to offer your lists for rental or exchange, consider the privacy of your donors. You may want to offer donors the opportunity to opt-out of lists you furnish to outside mailers and phone solicitors. If the telemarketer owns the lists, you may wish to retain the right to obtain certain donor information in order to provide tax information to donors and reports to regulators.