What is a Third-Party Fundraising Agreement and Do You Need One?
In the world of nonprofit fundraising, it's common for passionate supporters and organizations to host events that benefit a charity or cause they care about.
These events, often referred to as third-party fundraisers, are great opportunities for nonprofits to raise funds and increase awareness without having to organize the event themselves. But, like any partnership, there are certain guidelines that need to be followed. This is where a third-party fundraising agreement comes into play.
At Whirlwind Productions, we specialize in event marketing, but we also know the importance of setting up proper frameworks for fundraising events. A third-party fundraising agreement is a formal document that outlines the terms and responsibilities between the nonprofit organization and the third party who is hosting the event. It ensures clarity on both sides, protects the charity’s brand, and sets the event up for success.
So, do you need one? Let’s break down why it’s a must-have.
What is a Third-Party Fundraising Agreement?
A third-party fundraising agreement is a formal contract that outlines the roles, expectations, and guidelines between a nonprofit and the host of a fundraising event. It covers essential elements such as the use of logos and branding, marketing approval, volunteer expectations, and financial reporting.
The purpose of this agreement is to protect the integrity of the nonprofit while ensuring the event is legally and ethically sound. Here's why it’s so important:
1. Protecting the Organization’s Brand
Nonprofits spend years building trust with their communities, and their branding (logos, mission statements, etc.) is a key part of that reputation. The agreement ensures that the third-party host uses the nonprofit’s logo and branding in a way that is consistent with its identity. All promotional materials must be pre-approved to avoid any misrepresentation.
2. Clear Marketing and Messaging
One of the most common challenges with third-party fundraising events is inconsistent or unclear messaging. The agreement ensures that any language referring to the nonprofit is approved, keeping the communication clear and consistent. It also ensures the nonprofit’s marketing department can review all materials before they are shared publicly. This prevents any confusion for potential donors and attendees about who is hosting the event and where the proceeds are going.
3. Expectations for Volunteers and Support
Nonprofits may choose to provide volunteers or promotional support for a third-party event, but this is something that needs to be clearly defined. The agreement outlines the number of volunteers requested and the specific roles they will fill. It also sets expectations about what promotional assistance (social media posts, emails, etc.) the nonprofit can offer. Having this all in writing helps both parties understand the level of involvement.
4. Financial Transparency
A major component of the third-party fundraising agreement is financial transparency. It ensures that the nonprofit will receive a full report on the sponsors, donors, and total funds raised after the event. This information is crucial for the charity to acknowledge donations and maintain an accurate donor database. Additionally, the agreement will specify that all proceeds go to the nonprofit within a set time frame, typically 30 days post-event, accompanied by a financial report.
5. Board Approval
Before any third-party event can take place, the agreement typically requires board approval from the nonprofit. This ensures the charity’s leadership is fully aware of the event and can make a decision based on its mission and goals. The approval process also protects the organization from being associated with events that may not align with its values or comply with legal requirements.
Why You Need One
Simply put, a third-party fundraising agreement is essential to protect both the nonprofit and the host. It sets clear expectations, ensures brand protection, and promotes transparency. Without one, the nonprofit risks damage to its reputation, legal challenges, and confusion over the proceeds raised.
If you’re planning to host a fundraiser for a charity or nonprofit, it’s always best to have a clear agreement in place. It not only benefits the nonprofit but also ensures the success and professionalism of your event.
