An overview of the financial obligations of the Club and how to manage club finances, including dues, operating budgets and fundraising.

1. Fundraising at Smith with Trish Jackson, VP for Advancement
2. Dues Structure
3. Events
4. Annual Reporting

Fundraising for Smith College was historically one of the primary missions of Smith clubs and has been an important and appreciated source of financial support for the college.  Funds raised by Smith organizations go to one of three places: into the operating budget, toward a book award, or toward scholarships for students through the Alumnae Fund.

Before talking more specifically about club finances, we’d like to turn the conversation over to Trish Jackson to share information about fundraising at Smith, what the current initiatives of the college are, and the role that club fundraising plays.
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Trish:  First, many thanks to all of you for the tremendous work you do for Smith College.  Sixty-five percent of Smith students are on financial aid and the average grant given is $22,000.  Funds are extremely important, though the college does not rely on the money given by clubs.  Many clubs have endowed scholarship funds that continue to appreciate whether additional money is added or not.  The top priority for Advancement is raising funds so the college can thrive.

Questions:

• Please distinguish between current use and endowed funds:  Current use is like your checking account and contains money spent during that year.  Endowed funds are more like a savings account and the interest is income that is spent during the year.

• There is a minimum of $50,000 for a club to start an endowed scholarship fund.

• Planned Giving: The most successful planned gift for Smith has been bequests, when alumnae or friends remember Smith in their estate planning.  Unrestricted bequests are followed by gift annuities.

• Financial Aid: with the recent trend in doing away with loans many of our peers want to know how we get so many low income students.  Smith has the largest number of Pell grant students, and has a standing commitment to giving access to low income students.  The college also meets full need and gets help for the federal government because we’ve ranked number one in the country for the number of grants.  (http://saqonline.smith.edu/article.epl?issue_id=21&article_id=2099 )

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Smith College is grateful for contributions generated by organizations.  However, the AASC recognizes the difficulty of recruiting volunteers to organize fundraising activities and recommend the following guideline:  If fundraising has become a difficult endeavor for the organization and is fueled more by guilt than by genuine enthusiasm for the project, focus on other priorities and activities to support the college.  Clubs and groups may prefer to invest resources in activities such as student raising, career networking, community service, and alumnae education.  These projects serve to further the association of alumnae with the college and raise the awareness of Smith’s excellence in the community, and therefore are valuable to the college.

The organization may have an established fundraising activity that is an integral part of the organization’s program or sense of purpose, and can be carried out with relative ease by available volunteers.  In this case, the alumnae outreach department encourages organizations to continue with established projects.  If an organization has an idea for a fund-raising project it believes would generate enthusiasm and foster cohesiveness among members, its pursuit is encouraged.  For many organizations, fundraising has been a focal point of their activities.

Please note: If a club or group has tax-exempt status, money raised for the scholarship fund is tax-deductible and checks are made payable to the club or group. If a club or group does not have tax-exempt status, gifts should be made payable to Smith College.

Revenue, Dues, and Expenses

The organization generally has three options available for generating revenue:

• Solicitation of dues from organization members
• Setting the price for programs above the cost to the organization
• Selling novelty items or products

Dues
The treasurer solicits members for dues on a regular schedule.  It is the general practice to solicit dues in a newsletter, although an organization may also send a separate mailing to area alumnae just for this purpose.  The range of dues is currently $20 to $75 annually, usually with an exception for recent graduates.  While the AASC does keep general information regarding the various rates for organization dues, it does not keep records of who has paid club dues.  The treasurer keeps records of dues received and credited.

Soliciting Club Dues
The AASC suggests the following basic guidelines:

• Be clear and specific about the use of dues on the solicitation form.
• Provide a preaddressed envelope (usually with the treasurer’s address on it) with any mailing soliciting dues.
• Include a personal note on a solicitation for better results.
• State on the dues form that the alumna’s check must be made out to the organization.
• Consider adding a Paypal, google pay or other online payment option to your website.

Organizations are also urged to be creative in solicitation:

• Offer discounts for members at organization events or for alumnae who pay dues prior to the beginning of the fiscal year.
• Recognize alumnae who have paid dues in the organization newsletter.
• Provide a complimentary copy of club directory.

All officers should have an accurate list of alumnae who have paid for reference when corresponding with members to either thank them for their support or to ask them for additional funds.

Setting the Dues Fee
It is helpful to consider the following when setting dues:

• When was the last solicitation for dues and how successful was it?
• What is the size of your organization?
• Is the current treasury in good shape?
• What are the major expenses of the organization (newsletters, events, operating expenses)?
• Do you anticipate any increase in expenses next year?
• What is the anticipated cost of sending the organization president or president-elect to the AASC’s clubs leadership conference?
• What are the anticipated expenses for student-raising activities?
• What is the current postage rate for a first-class mailing and is an increase anticipated?

Bank Accounts
The treasurer should open a bank account in the name of the organization, as the principal signature authority with a second officer, usually the president, having authority as well.  To open a bank account the treasurer will need the following:

• A check
• The organization’s 501c(3) or 501c(7) tax-exempt number, if applicable.
• The Social Security number of the second club officer who has signature authority over the account.
• The organization’s EID number

Do not open an account for an organization using the treasurer’s personal Social Security number.  This will cause problems with the Internal Revenue Service for the person when filing income taxes.

The Successful Fundraiser
All successful fundraising projects have three things in common:

• Alumnae are made aware of how their gift will be used and that it is tax deductible.
• A Smith connection is evident.  For example:
• selling prints of College Hall
• sponsoring a night with Smith friends at the opera
• working with a group of Smith alumnae on a book sale
• Donors receive a thank you and final report of the fundraising results. Knowing the success of the fundraising effort and feeling appreciated for their contributions help alumnae stay involved.

Important Information for Club Treasurers
If an individual alumna would like to receive “comprehensive credit” (meaning that her gift would be counted towards her class total and campaign total) for her gift to the club's scholarship fund, the treasurer should submit a list of alumnae names and donation amounts to the college when sending in the year-end check payable to Smith College.

Question to call participants: what do you do for membership and dues?
Hampshire county has some members only events, but anyone can show up and become a member.  They have redesigned their form so it allows people to indicate what they want to give to and what kind of event or role they’re interested in.  Have adopted the “what can we do for you” approach versus “what can you do for us”.  New Hampshire has open membership and a pay as you go fee for events in addition to an annual $10 dues fee per year.  Watchung Hills, NJ has about 100/520 alumnae who pay dues pretty consistently.  They added extra lines to their fall mailing this year for people who want to give a specific dollar amount.  Otherwise, they have a $20 open membership.  Sarasota, FL has 100 dues paying members who can pay their membership at the annual lunch.  The fee is $20 per year and they have an “outreach” category for the community.  Some clubs, like NYC, are experimenting with no dues and fee for event structure to be more inclusive of the large number of alumnae there.  Sheila, in Florida, offered to share her budget form

Volunteer Connection allows volunteers to keep track of their membership. Many groups are using a combination of email and snail mail to reach all of their members, and rely on feedback from membership form to determine who prefers which type of communication.  Phoenix also takes advantage of free press releases in their local paper to reach those who may not use or regularly check email. 

Three Successful Styles  of Fundraising

• Direct Request

    This is the easiest method for many clubs, although the results can vary substantially from club to club and year to year.

• Donations can be requested through a club newsletter, on a dues form, in a meeting notice, or at an event.
• Be sure that the need for the gift and the purpose are clear. State the goal for the year. Specify that the gift is tax deductible.
• Suggest an amount, or leave it blank.

• The Benefit Event

      This form of fundraising requires the most effort but often yields more financially, and as a result can be more satisfying for the organizers.

• Build momentum by securing sponsors who contribute a specified amount in advance. Include their names on invitations.
• Price the event differently for younger members or dues-paying members, etc.
• Call, call, call for good attendance and alumnae involvement.
• Try to plan an event that does not include serving meals. Dinners are complicated and expensive, and you have better results if the dollars go to Smith rather than to the caterer.
• Hold the event at a special location.
• Make it fun or educational.
• Some examples:
• Wine tasting
• Book sale
• Private museum showing

• The Merchandise Item

Once established, this type of project (if supported with ongoing marketing strategies) can be a fairly reliable source of funds.

• Choose an item that has wide, long-term appeal, can bear a reasonable markup, and is not widely available.  An item that is identifiably Smith is best.
• Consult with the AASC — we can offer advice about merchandise items that other Smith organizations are selling.
• When pricing the item, keep in mind the quantity you will need to sell before your treasury will see a significant profit.  For most items, you may have to purchase in large quantity, which will raise the initial cost.  Identify either a group member who is willing to store and mail out the goods or a local company willing to produce and ship goods.
• Bring the product with you to all organization meetings and mention it in your correspondence.  Distribute order forms to members so they can sell the item(s) to non-Smith friends.

Treasurer

The treasurer is responsible for the fiscal management of the treasury, including the collection of dues and maintenance of all financial records.

Responsibilities

• Sets financial guidelines for management of funds and ensure that the guidelines are ratified by the officers
• Assists the vice president/program chair in developing a program budget for the year
• Sets the dues rate for the organization, in conjunction with other officers
• Solicits dues from members on a regular schedule
• Pays all authorized bills and volunteer reimbursement efficiently and ensure that the club has a firm financial base to launch annual programs
• Submits an itemized financial statement to members at the annual meeting
• Submits an annual financial report to the president and the alumnae outreach department by July 31st of each year
• Maintains a list of members with their donation amount to the organization’s scholarship fund (if applicable) for those who want comprehensive credit, and submit it with the annual donation to the college (see page 45)
• Maintains record of all annual financial reports throughout term
• Has a clear understanding of organization’s financial history and treasury status
• Follows rules regarding disclosure of the group’s financial status, in accordance with laws governing tax-exempt status

Financial Records and Accounts

Organization treasurers maintain the treasury for the duration of their term.  The treasurer sets the financial guidelines for the management of organization funds and ensures that these guidelines are ratified by the organization officers. 

The AASC strongly recommends that an organization’s financial records be maintained on a computer accounting/spreadsheet system.  For treasurers who do not have access to a computer, financial records of the organization must be maintained in accordance with standard accounting practices.  The treasurer is authorized under the bylaws to receive and disburse funds.  Other officers may also authorize the disbursement of funds.

Organization funds are to be used solely to benefit the organization.  The treasury is maintained to meet obligations such as the printing and mailing of newsletters; the expenses of officers while on organization business (see page 53 regarding reimbursable expenses); and other authorized activities.

Treasurers should make clear to other officers the system for reimbursing expenses.  All invoices should be in the name of the organization and payable only after approval is indicated on the invoice by the authorizing officer.  The treasurer should also make clear to all officers the amount of discretionary money that is available for them to spend on a particular project.  The organization may choose to list annual dues-paying members in a newsletter or make a presentation at the annual meeting. 

Reimbursable Expenses
The executive committee of officers generally determines the guidelines concerning the expenses of volunteers.  The AASC offers the following suggestions:

• Receipts should be submitted with all requests for reimbursement.
• Receipts should be accompanied with an explanation of how and when the expense was incurred on organization business.
• Develop a routine system for reimbursing a volunteer.

In standard business practice, the following constitute acceptable reimbursable expenses:

• Travel expenses:  airfare, train, bus, automobile mileage, cab fare, parking fees, tolls, shuttles, public transportation, car rental.
• Accommodations:  hotel, motel, bed and breakfast, etc.
• Meals: reimbursed with receipt.  Establish guidelines based on a set amount, for example $5.00 for breakfast or $25.00 meal allowance per 24 hour period.
• Tips for services: baggage handling, room service, waitperson, etc.
• Telephone calls, postage, copying, faxing for organization business.
• All previously authorized expenses for supplies including stationery and envelopes.

Expenses that are generally not reimbursable:

• Parking tickets or speeding fines
• Personal services while traveling (dry cleaning, manicures, shoe shining, etc.)
• Alcoholic beverages
• Personal gifts
• Child care while on organization business. (This is an expense that an organization may decide to develop policy around for reimbursing volunteers.)

Tax-Exempt Status

Tax-exemption for Smith Organizations
Many Smith organizations have received tax-exempt status under 501c(3) or 501c(7) of the Internal Revenue tax code.

Apply for tax-exempt status only if one or more of the following applies:

• The organization sponsors fund-raising activities (this does not include money raised through the sale of organization memberships).
• The organization wants to send its own bulk mailings (as opposed to having the AASC process these mailings).
• The organization spends a large enough amount of money on federal and state taxes to make applying for tax-exempt status financially prudent.  (Keep in mind that the fee for filing for tax-exempt status is $150).
• The club wants to offer tax deductibility for dues and donations.

Benefits to 501c(3) Status

• Ability to open and maintain an interest-bearing bank account without the bank withholding taxes
• Deductibility of dues for members
• Deductibility of donations to the organization
• Nonprofit bulk mailing rates
• Exemption from state tax in many states

Eligibility
Organizations not currently designated as tax-exempt may file for exemption under section 501c(3) of the Internal Revenue code.  The AASC will provide an application package upon request.  All filing fees and completion of the application itself are the responsibility of the organization.  Eligibility for 501c(3) status involves the organization’s constitution and bylaws clearly stating a mission in support of Smith College.  The AASC has sample bylaws that are written to fulfill this criterion.  As a result, the process for filing for 501c(3) tax status is two fold:

• Bylaws must clearly state that the mission of the organization is to support Smith College.  If current bylaws do not make this statement, change must be voted upon by the membership. No other steps toward tax-exempt status may be taken until this has occurred.
• The treasurer prepares the necessary filing forms.  (These forms and instructions can be provided by the AASC.)

To secure or maintain 501c(3) tax-exempt status, a organization must meet certain financial tests.  More than one third of the income in each tax year must be from gifts, grants, contributions and membership fees (dues).  Not more than one third of the annual income can come from gross investment or other nonrelated income. The treasurer is responsible for managing the treasury to earn income on investments and balance this income with dues income in a given tax year.

Substantiation Requirements for Donors
Tax regulations that were instituted January 1, 1994, affect tax-exempt charitable organizations.  These regulations are important not only to Smith College and the AASC, but also affect Smith clubs, affinity groups, and classes that hold tax-exempt 501c(7) or 501c(3) status.

The IRS regulations specify the following:

For Gifts of $250 or Less…
A tax-exempt organization must provide a written disclosure statement to donors who make a quid pro quo donation in excess of $75.  A quid pro quo donation is a payment made partially as a contribution and partially for a good or service provided by the tax-exempt organization to the donor.
For example, a donor gives a $100 donation in consideration of a concert ticket valued at $40.  For tax purposes, $60 of the $100 donation would be considered tax deductible because it is above the cost of the ticket.  The remaining $40 would be indicated as the value of the good (or service) received by the donor from the tax-exempt organization. (See Appendix III for sample donation receipt).  For fundraising events, clubs can also ask alumnae to write two separate checks, one for the scholarship fund, the other for the cost of the event.

A written acknowledgment must indicate the amount of the cash donation and either a description and good-faith estimate of the value of any goods or services provided in consideration of the donation or an affirmative statement that no goods or services were provided for the donation.

The outreach department asks that organizations keep the AASC informed of any events sponsored by the organization that would involve a quid pro quo donation exceeding $75.

For Gifts of $251 or More…
In order to ensure that Smith College is in compliance with tax regulations and in an effort to provide timely service to Smith clubs, affinity groups, classes, and alumnae donors, we ask that you send all “gifts” of $250 or more to the college for processing. The college will credit the specific organization and the alumna and send an acknowledgment that complies with IRS regulations to the donor.  Include the donor’s full name, class, address (if known), date, and amount of the donation.  Please verify that no goods or services were provided in consideration of this donation.  Please direct these “gifts” and correspondence to Gifts and Records Department, Office of Advancement Services, Stoddard Hall, Northampton, MA  01063.

IRS Filing Requirements

Nonprofits are not required to file a return unless they gross more than $25,000 annually, or they receive a 990 or 990 EZ form in the mail from the IRS.  However, the AASC’s tax attorney advises that a 990 EZ be filed annually as a way of closing the books for the tax year.  If the organization does not close out the tax year in this manner, if the IRS questioned one year, they could go back and review any “open” year.  If the club’s annual gross income is under $25,000, only lines A through J need be completed.

The current year’s 990 EZ may be ordered by calling the IRS at (800) 829-3676.  The form may also be downloaded from the IRS web page at:
www.irs.ustreas.gov/forms_pubs/forms.html.

Determining a Club’s Tax Status and Managing Fundraising without Tax-exemption

• Determine from the financial records whether or not the organization is tax-exempt and under what section of the IRS code.

1. If the organization has a letter of determination from the IRS, that is definitive.  Please send a copy of the letter to the assistant director for clubs.
2. If the organization does not have a letter of determination, but the treasurer believes the organization is tax-exempt, request a letter of affirmation for the club from the IRS, or call the assistant director for clubs to see if the letter is on file.

• Determine whether it is necessary or prudent for the organization to apply for tax-exempt status.

1. If the organization wants to apply for tax-exempt status, request the forms and filing application packet from alumnae outreach and proceed by submitting the forms to the IRS.
2. If the organization does not wish to have tax-exempt status, the fundraising of the club has to be managed in the following manner: Any fundraising activities (e.g., product sales, fundraising benefits) must be separated into two categories, and the checks are written differently.

What is the IRS looking for?
As a result of an application for 501c(3) status the IRS may do one of the following:

• Confer 501c(3) status
• Confer 501c(7) status
• Confer another status category
• Request further documentation (rare)
• Deny the application (hasn’t happened yet)

Donations made to clubs with 501c(3) status are tax deductible, while donations made to 501c(7) clubs are not tax deductible.

Either status grants the organization the opportunity to

• Avoid paying sales tax or tax on income from investments
• Apply for a bulk mailing permit

Instructions for Determining Current Tax-Exempt Status
To resolve the issue of the organization’s current tax-exempt status, mail a letter to the IRS Customer Service Unit at P.O. Box 2508, Cincinnati, OH 45201 requesting an affirmation letter.  Include the club name and EID number.

The organization may receive a letter from the IRS confirming receipt of the request prior to actually receiving the letter of affirmation itself.

Please remember to send a copy of the affirmation letter to the attention of Assistant Director for Clubs, Alumnae Association of Smith College, Alumnae House, 33 Elm St., Northampton, MA 01063, to be kept on file with the club records. Call (800) 526-2023 (press 4) for help with problems or questions.

Year-end Reports
These reports allow us to get an annual snapshot of each club’s finances, leadership, membership, and programming so that we can assess how clubs are doing and what the Alumnae Association can do to better support you. Specifically, this information helps us plan for the upcoming year by showing us what topics to cover at the Volunteer Conference
in the fall and what resources and services clubs need. Please help us by submitting
your year-end reports by July 1. For your convenience, all the year-end reports can be
submitted online.

Financial Report:
Financial reports are mailed to all club treasurers (or club presidents if no treasurer
is listed) in early May. The information you provide in this report is essential to the
because we must report to the Internal Revenue Service on the activities of all clubs. Clubs who fail to report to us are in danger of losing their federal
tax exemption and protection under the Alumnae Association’s umbrella.
Annual Report:
The annual report is not only helpful to us in the Alumnae Office, but it’s also a helpful
record for your club as new volunteers transition into leadership roles. In the fall, we
summarize the findings from the annual reports at AASC Board Meeting, and
the more clubs that submit their reports, the more useful the information will be to you and other club volunteers.
Club Officers Report:
Lastly, do not forget to submit your club officer’s report. We use this information to
code your volunteers in our database so that each person receives the appropriate
information from our office. We need your help in keeping our club volunteer database up to date.