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Funding Your Startup or New Charity

One of the most confounding charitable endeavors I was ever involved in was figuring out how to fund a startup charity that made grants to other charities. HelpUsAdopt.org, founded in 2007, is in a similar boat. The 501(c)(3) foundation grants would-be adoptive parents up to $15,000 for adoption expenses.

In short, they raise money to give it away.

Included in their fundraising mix are gala-type events, annual donor solicitation, and a small catalog of products including the necklace and bracelets modeled in the ad at the left by actress Nia Vardalos, of My Big Fat Greek Wedding fame.

The necklace Nia is wearing in this ad from the June 2011 Redbook magazine goes for $225 and the bracelets for $35 each. The HelpUsAdopt.org store also currently sells a brown wooden bead necklace for $95 and a tote bag for $20.

The nonprofit fundraising world is set up to favor established charities, and with good reason. IRS figures show that 16 percent of nonprofit charities that filed a 990 tax return in 2000, didn’t file one in 2005. Since 501(c)(3)s don't have to file a tax return if they take in less than $25,000 not filing means that they either went out of business or that they couldn't raise money.

As a consequence, if your organization is less than five years old, grantmaking foundations seldom gaze your way. Knowing this, grant writers often keep themselves aloof from new charities. Corporate donations are unlikely, although not impossible, to secure for nubes. Bequests, which are a big slice of the revenue pie for established charities are really rare for rookie charities. New charities, therefore, tend to rely on major donors until they can get their feet under them.

HelpUsAdopt.org seemingly has five major donors who came in at the $15,000 level, including the founders, Becky and Kipp Fawcett. So that’s $75,000. Four more came in at between $5,000 to $10,000. So figure $7,500 times four which adds in another $30,000, bringing a grand total of approximately $105,000 from nine major donors. Events and smaller donors brought in the rest of the $300,000 HelpUsAdopt.org has given away since 2007.

It appears to me that as a new charity HelpUsAdopt.org is relying on the jewelry to sell. For my part, I’m chary of such a strategy.

If you sell stuff, someone has to keep inventory on hand. The jewelry is sold online only, so someone has to drive traffic to the website. Then the website has to covert traffic to sales. Someone has to fulfill orders. And if it doesn’t sell someone has to eat it all. It appears to me that HelpUsAdopt.org is the entity on the hook for all this.

All of this would be OK if HelpUsAdopt.org was 'all benefits company' like Newman’s Own, which sells stuff in order to make grants to charities. It would be OK if HelpUsAdopt.org was merely doing a cause marketing deal of the type that Susan G. Komen does where someone else takes the risk of putting the pink ribbon on garden trowel or warm-up suit and selling it. But HelpUsAdopt.org is not Newman’s Own or a Susan G. Komen licensee. It’s a straight-ahead 501(c)(3) nonprofit charity.

I hope I’m wrong about HelpUsAdopt.org’s foray into product direct sales. They have a worthy cause. But I don’t think I am.

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