Nonprofits are finding creative new ways to raise funds, cut costs

June 13, 2014

Nonprofits are finding creative new ways to raise funds, cut costs

In Kentucky, local nonprofits saw a boost in funding from this year's annual Kentucky Gives Day. More than 400 nonprofits in the state participated in the Web-based fundraiser, hosted at, according to WYMT. The event raised more than $330,000 for the organizations and will likely be held again in 2015.

Nonprofits in states around the country have held similar "give days," most of which take a Web-based approach to fundraising. While the funds are ultimately spread fairly thin, the cost to participate is essentially zero to each of the organizations involved. With a single marketing campaign and one website, hundreds of organizations can benefit. While crowdfunding does not replace more traditional forms of engagement with donors, it is an inexpensive way to raise some extra funds.

Crowdfunding is just one of the many methods organizations are utilizing to keep their books balanced as they continue to recover from the recession. The past five years exposed the fragility of many organizations, and nonprofits have realized that they must be far more conscious about their budgets. While many see the need to save more money in case another recession hits, no groups want to cut programs. To make sure that operations don't suffer because of tight budgets, nonprofits must take advantage of all the opportunities they can to improve their finances.

The benefits of becoming a reimbursing employer
One cost-saving measure that many organizations are not familiar with is the ability to opt out of state unemployment insurance tax (SUTA) pools. One of the many financial blows that was dealt to nonprofits during the Great Recession was the increasing cost of SUTA contributions resulting from extraordinarily high benefit payouts that overwhelmed state unemployment agencies funds. SUTA funded risk pools are unpredictable during good economic times and nearly guaranteed to rise during bad periods. The best move for any nonprofit regardless of the current economic climate is to become a reimbursing employer.

Under this designation, nonprofits are responsible only for the actual amount of money paid out to former employees as unemployment insurance (UI) claims. A nonprofit with no unemployment would have no costs. However, if unemployment does spike, the nonprofit could struggle to pay the state unless it has an alternative financing option. Nonprofits should meet with a professional organization that can determine the best method for satisfying their UI obligations when they have made the decision to opt out of SUI tax pools.

Content presented by First Nonprofit Group, the leading provider of state unemployment insurance solutions for 501(c)(3) nonprofit employers.


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