Why You Need a Third-Party Event Agreement
During our current environment of social distancing, special events are being done in a different manner. Virtual events are starting to take off as a way to raise funds and stay connected with donors. What about groups who wish to raise funds on your organization’s behalf with a special event. How do you handle this?
First, raise your hand if you know the definition of a third-party event. In the world of commerce, a “third party” is someone not controlled by the seller (first party) or the buyer (second party) in a business transaction. In the nonprofit sector, a third-party event is one that is organized to benefit a nonprofit organization.
The organization should not be involved in the planning or soliciting of donors or sponsors. We love third-party events that are done well, you know, the ones where you show up for a photo-op and receive a check.
Before you accept the offer of a third-party fundraiser, I suggest you check out the AFP Global website. It offers a wealth of information and sample documents to its members. There is one for Third Party Policies and Procedures that will help you create your own document and weigh the pros and cons of this type of event.
The AFP sample document includes:
· Definition of terms
· Policy statement
· Proposed events
· Organizations responsibilities
· Liability, licensure, insurance
· Revenue and expenses
· Organization’s rights of refusal
Unfortunately, not all organizers follow best practices and third- party events don’t always provide the promised funds.
Be clear with the organizer about how your organization’s name can be used and be careful about the time commitment expected from staff. You want to avoid a situation where a group has heavily promoted this fundraising event on your organization’s behalf and yet you never see any of the proceeds. If the arrangement doesn’t seem to be in the best interest of your nonprofit, then it’s best to decline the opportunity.
You can help others help you by including a How To or a “Tool Kit” on your website for those interested in hosting a third-party event. This can answer a lot of questions and provide guidance to those who want to help.
· List examples of events that can be held such birthday or anniversary parties, cocktail party, garage sale, trivia night.
· Include how your organization can help, such as providing a letter of authorization
· Be clear in what your organization cannot do, like provide liability insurance or a sales tax-exempt letter.
It is in the best interest of both your organization and the third-party fundraiser to have a written and signed agreement that outlines roles and responsibilities, defines expectations, abides by your policies and procedures, and protects the good name of your organization.
We can help you navigate your internal and third-party events into virtual ones. Let us know how we can help!
Michelle Crim, CFRE
Dynamic Development Strategies can help. We offer coaching and fundraising services for our nonprofit clients. We specialize in startup and smaller nonprofits because we understand your challenges. Please contact us for more information.