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What's a reasonable time period for distributing funds?

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What's a reasonable time period for distributing funds?

When our 501(c)(3) organization raises funds and tells the public that we are going to donate to a specific cause, how long do we have to submit the funds to that charity? I am concerned by the length of time it takes when we are told that the Board has not decided how much more to contribute to that cause. I feel at least the amount raised should be turned over after the fundraiser within a reasonable time period.

I agree with you.  It should be used within a reasonable time.  I just can’t tell you what a reasonable time is.

It may depend on what your solicitation literature said when you were trying to raise the money.  If the solicitation was silent, do you have general policies on such distributions?  Many United Way organizations that receive gifts earmarked for other charities in the community distribute the money quarterly over the following year, with a reserve for unfulfilled pledges, because the money comes from payroll deductions throughout the year.  Other organizations may aggregate funds from other sources to make a more impactful gift for a specific project.  In the old days, when it was possible to earn noticeable interest on short-term accounts, some organizations used the income on the “float” before the funds were disbursed to support their own efforts.

You are probably more likely to raise more money if you distribute it quickly than if you hold it for significantly longer periods.  Professional solicitors normally have to turn over funds within a matter of days, but I am not aware of any legal limit for charities that raise funds for causes or organizations as part of their own programs.

Thursday, October 10, 2013

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