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Donor-Initiated Fundraising

by Doug Bechtel

The Actors Theater of Orcas Island

About the Author

Doug has been CEO of non profit cooperative corporations for 25 years and has served on dozens of non profit boards. He is currently President of The Actors Theater of Orcas Island, which was founded in 1999. He is also a founder and current Secretary of The Orcas Island Community Foundation, and has recently served on the following non profit boards: The Orcas Island Medical Center Association, The Orcas Island Sportsmans Club, the Kiwanis Club and the Chamber of Commerce. Active in the theater since 1996, Doug has been producer, director, actor, techie and anything anyone would let him do.


This is an issue that has recently received a lot of attention at nonprofit organizations all over the country. In a nutshell, a donor-initiated fund raiser is an event that is held by a group not associated with your organization for the express purpose of raising money for your organization.

For example, suppose a few supporters of your theater decide to hold a golf tournament, charge $100 an entry and pledge the net receipts to your theater. No problem, you think? It depends. If your theater permits the use of its name, either by permission or failing to prohibit the use of your theater's name, your group can be held responsible for the event, including providing the IRS tax receipts for the golfers, paying any unpaid bills for the event and financial liability for anything that goes wrong.

What does all this mean? How does it come about? To continue our example, you might receive an invitation to the golf tournament or read an article in the newspaper about the event. The wording may be relatively innocuous such as: "Come to our golf tournament and help the XYZ Theater" or "All profits to benefit the XYZ Theater" or "Your tax-deductible donation will help the XYZ Theater". All of these can make the XYZ Theater responsible for the fund raiser.

99.9% of these fund raisers will come off without a hitch and your theater will get a nice check for the work that others did. It is that one in a thousand event that has a problem that will come back to haunt you.Suppose someone has too much to drink at the awards party and gets into trouble on the way home. Where are the deep pockets when the attorneys get involved? The event sponsors? Probably not. Your theater may be viewed as the deep pocket and all of a sudden you find yourself in a lawsuit for something you had no control over.

How do you protect yourself? No one can use the name of your theater without your permission. If someone does, you need to stop them from using it. Vigorous and prompt action to stop the use of your theater name is essential. This does not mean that the group cannot give you any money that they want, just that they can not use your name in the promotion ofthe event.

A caveat: I am not an attorney, just a community theater afficionado You need to talk to someone with more knowledge if you think you may have a problem.


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