Frequently Asked Questions - Designated Donations
Want to learn more about our projects and how we handle designated donations? Check out these frequency asked questions below. Still got a question? Please contact Rebecca.
All donations come through the same way, so in order for us to know that you meant for your donation to be designated to a specific project you must use that project's specific webpage. If you use the Donate page, there is no way for us to know that this donation was meant to be designated to a project. If you made a donation through this page and want it designated, please contact Rebecca.
When a partner finishes our beginner training, they have the opportunity to submit an application for Cultivate to approve their community project. If accepted, this project is then able to receive funds through Cultivate.
Our application process follows the IRS guidelines for nonprofit organizations regranting funds, called expenditure responsibility. You can learn more about this here. This basically requires Cultivate to take on full responsibility for the funds that we regrant to our partners' projects. We take this very seriously!
Approved projects have submitted a business plan, leadership accountability plan, budget, and fundraising strategy. All funds that they receive must be used according to their approved budget, and any changes must be approved in advance. Once funds are disbursed, the project leader must submit a quarterly financial and impact report, along with spending receipts. Any projects that have insufficient reports do not receive subsequent transfers until reports are approved.
All projects also have bank accounts to receive funds that adhere to our policies, and protect your donation from misuse or theft.
If there are any questions to the proper use of funds by a project, all funds are immediately frozen until our board of directors decides on a course of action. Since Cultivate is ultimately responsible to the IRS for the use of all the designated donations that we regrant to our partners' projects, we take this very seriously.
If for any reason a partner misuses funds per our policies, or there is evidence of theft, all the remaining designated donations will not be regranted to that project. Per IRS guidelines, Cultivate has the right to redirect those funds to other approved projects or to our programs, but we will work with donors as much as possible to redirect funds based on their desires.
If a project just started fundraising, they must first reach a minimum amount of donated funds before those funds will be disbursed. Each project, as part of the application, determines what this minimum amount is, based on the project's activities and needs. So if a project leader determines that at a minimum, they need $500 to start their activities, Cultivate will hold on to funds until $500 is reached.
Once the minimum is reached, a project begins to receive transfers every quarter, or when the transfer minimum amount is received. The transfer minimum amount is determined based on the transfer options that the project has access to, so that we can keep transfer costs low. For example, if a project is able to use PayPal, then their transfer minimum is $100 as PayPal fees are low. But if a project can only receive bank to bank wire transfers, then their transfer minimum is $500 as wire fees are costly.
In order to provide this service to our partners' projects, Cultivate must charge a small fee. This is standard practice among nonprofit organizations that act as fiscal sponsors for unregistered projects. Most other fiscal sponsorship organizations charge 8-15% of the donation amount as a fee, and additionally charge transfer fees.
Cultivate knows that each dollar raised by our partners is valuable and hard-earned. We want to support their projects as much as possible, yet know that we cannot offer this service completely free of charge. We incur costs to offer this service - costs such as hosting their webpage and having the technology to accept online donations, bookkeeping and accounting costs, bank charges, credit card processing fees, and staff time devoted to this aspect of our program.
Thus, Cultivate charges projects a 5-8% fee (5% if the donation is received in cash or check, 8% if received online). Unlike other organizations, this fee covers their transfer costs as well.