To be able to allocate joint costs and not have an item count as 100% fundraising the item or event has to pass a 3 tiers of criteria:
- Purpose – i.e. will this help accomplish the entity’s mission. This requires a “Call to Action” which is encouraging or educating the audience/population to take an action that would be in line with your mission. Best example: cardiac society gives brochures with informaiton on suggested ways to reduce risk of a heart attack such as quitting smoking. A proportion of the brochure asks for contributions – that’s a legitimate joint cost if the other criterion are also met. The amount allocated to fundraising would be based on the proportion of the brochure. If 1/8th of the brochure is dedicated to requesting contributions then 1/8th of the brochure’s printing and mailing costs would be allocated to fundraising. If the Purpose criteria is failed then 100% has to go to fundraising.
- Audience – if the recipients of the brochures/mailers or attendees of an event are primarily prior donors or members then there’s a problem. The population receiving the info has to be selected based on their potential use for the info and the audience can assist in meeting the goals of the purpose besides just raising money. Example: renting mailing lists from similar/ like-minded organizations and mailing to everyone there meets the audience test whereas mailing only to people who have given you money before does not.
- Content – This is much like “purpose” but the idea is you can have a purpose to it but not adequately or clearly convey the call to action so the content has to be clear and informative. The intent may be there but is the information all there?
If your item or event passes all three criteria then allocating a portion to fundraising and a portion to program activity is appropriate.
From SOP 98-2 : “Costs of goods or services provided in exchange transactions that are part of joint activities, such as costs of direct donor benefits of a special event (for example, a meal), should not be reported as fund raising.”